Most of us know that when a vehicle is repossessed, you lose both the vehicle and whatever payments you have made already. Moreover, if your vehicle is being repossessed, you may be struggling with debts, and you may need to speak with a Loveland repossession attorney.
The stress of a repossession can make an already difficult debt situation even worse, but you won’t be alone. Approximately 1.3 million vehicles in the U.S. were repossessed by lenders in 2020, and in a tough economy, that figure will certainly increase over the next several years.
What steps can you take to prevent your own vehicle from being repossessed? Is bankruptcy your only – or best – option? And if your vehicle is repossessed by your lender, what are your rights, and do you have any legal recourse?
Especially if your vehicle is at risk for repossession, keep reading this brief discussion of repossession and your rights, and those questions will be answered. You will also learn how a Colorado repossession lawyer may be able to help you with your repossession and debt issues.
What Is a Right to Cure?
If you do not make the payments that you agreed to make when a lender financed your vehicle, that lender has a legal right to repossess the vehicle. Under Colorado law, a borrower must be in default for ten days before the lender can notify the borrower with a “right to cure” the default.
In contract law, a “right to cure” allows a party who has defaulted in a contract to remedy or “cure” the default by bringing late payments current. Curing the default restores the borrower’s original rights and status under the loan contract as if the default had not happened.
Under Colorado law, when a borrower fails to make an auto loan payment, a lender cannot initiate legal action against the borrower before notifying the borrower of the default and right to cure and providing the borrower with a reasonable amount of time to cure the default.
After you receive a “right to cure” notification, you have twenty days (from the date it was sent) to cure your default. If you do not bring payments on the vehicle current within twenty days, the lender has a right to repossession, and most lenders repossess vehicles as quickly as they can.
What Are the Rules for Repossessing a Vehicle?
Lenders in Colorado must adhere to this state’s repossession laws. Lenders are not required to obtain a court’s permission in order to repossess a vehicle, but a repossession action may not “breach the peace,” meaning that a repossession agent (or “repo man”) may not:
- stop you on the street
- break into your vehicle or your garage or home
- misrepresent his or her identity
- create any kind of disturbance, threaten you, or harass you
Today’s technology makes repossession ruthlessly efficient. Many towing companies now use computers and digital cameras to locate and identify vehicles for repossession, so you can’t hide your vehicle and hope the “repo man” will simply go away. He won’t.
What Can You Do After a Vehicle Repossession?
Upon the repossession of a vehicle, a Colorado lender must send the borrower a notice of the borrower’s right to “redeem” (meaning retrieve) the vehicle by paying off all outstanding debt and additional charges. You may be required to pay off the entire amount of the auto loan.
That notice will include a deadline for the borrower to take action. After that deadline, the lender may sell the vehicle at auction. If you have not contacted a lawyer prior to a repossession, you should have a lawyer’s advice at once about the choices you need to make after the repossession.
What Are the Effects of a Vehicle Repossession?
No one wants to have his or her vehicle repossessed. You will face immediate transportation problems if you have work, school, or child care responsibilities. Moreover, merely being at risk for repossession can damage your credit score.
After your vehicle is repossessed, your credit score may drop even lower. Take action before a vehicle repossession by contacting a Loveland repossession attorney as soon as you know that you are at risk for repossession.
How Will a Lawyer Help You Deal With Repossession?
You’ll need an attorney’s advice and services. A repossession can make a stressful debt situation even worse, and in the long run, losing your vehicle and the payments you have made on it will probably cost you more than seeking an attorney’s legal advice and assistance.
If your vehicle is at risk for repossession, what are your options? Try reaching out to the lender, or have your lawyer reach out on your behalf. Many lenders will work with a borrower to hammer out a more realistic payment arrangement or a loan consolidation arrangement.
Bankruptcy is a last resort that will entail some negative consequences. You may instead want to consider refinancing a new loan with a more reasonable payment schedule. A refinance loan may reduce your monthly payments with a longer repayment period and/or a lower interest rate.
After a repossession, a Colorado repossession lawyer will explain your options and help you determine which option is best for you. For many Colorado consumers, filing for bankruptcy before – or after – a vehicle is repossessed may be the only practical and realistic choice.
What Should You Know About Bankruptcy?
When you file a bankruptcy petition, the bankruptcy court will issue an “automatic stay” that immediately prevents creditors from taking any collection or repossession action against you. In fact, a lender may face legal penalties for violating an automatic stay.
If your vehicle is repossessed before you can file bankruptcy papers, you might be able to get it back. With a Chapter 13 bankruptcy, you will have to pay what you still owe on your vehicle, and you will continue to make those monthly payments.
If you and your repossession attorney determine that bankruptcy is genuinely your only option, your attorney will explain the details you need to know about bankruptcy and will help you to complete the required legal paperwork.
A repossession will damage your credit and your ability to qualify for a loan. It will show up on your credit report for the next seven years. If the repossession of your vehicle is imminent, you must act at once and consult a Loveland repossession lawyer about your rights and options.