Possess the Facts and Learn What You Can Do
If you are behind on the payments for your car or truck, you probably go to bed at night worrying about the Repo Man, and whether your source of transportation will still be there for you in the morning. In such a stressful situation, it helps to know the facts. Knowing what is likely to happen takes some of the uncertainty and apprehension out of the equation.
The lender’s right to repossess a vehicle comes from the lien that you agree to when you purchase the vehicle. If you fail to make all the payments you agreed to under the lending contract, they have the legal right to come and take the property subject to the lien (this comes up with property other than cars and trucks, but those are the most commonly repossessed). As with any area of the law, there are rules, and knowing the rules always makes things easier.
Unfortunately, the creditor’s rights when you are not paying your car loan are much stronger than yours. Still, it can pay to reach out to a debt relief law firm such as Wink & Wink of Denver, Colorado. When you’re behind on your car loan, we can help you understand your options and develop a game plan for managing things going forward.
In Colorado, the lender must wait until the debtor is in default for at least 10 days before the lender can send a “right to cure” the default. A “right to cure” simply informs you of your opportunity to make up the missed payments and stop the repossession process in its tracks. However, if you have already been in default during the prior 12 months and the lender has already sent one “right to cure” notice, then the notice does not have to be sent again. You have the right to get the notice just once per 12 month period.
After sending the “right to cure” the lender must wait for an additional 20 days for you to cure the default. If you have not cured the default by the end of the 20 days, the lender may repossess the vehicle. (Again, be careful if you have already received one “right to cure” in the past year. They get to skip these steps and go right to repossession if that is the case.)
Repo Men Are Not Above The Law
Although Colorado allows repossession without the prior permission of the court, the Repo Man is not above the law. The statute allowing repossession without court approval requires that the property be taken back “without breach of the peace.” This is what we like to call “legalese”, or lawyer-speak. It’s a term that gets defined by the courts over time. What it means for you is that anyone seeking to repossess your property cannot:
• forcibly remove you from the vehicle;
• stop you on the street or highway like a law enforcement arrest;
• enter a closed garage or your home;
• break into your house;
• create a disturbance such as a fight or other altercation;
• threaten any of the above actions; or
• pretend to be a law enforcement officer while conducting the repossession.
Additionally, many new cars come equipped with a computer program embedded in the vehicle which allows the lender to disable the vehicle in the case of non-payment. This “breach of the peace” language means that the lender cannot disable your vehicle if immediate injury to any person or property is a reasonably foreseeable consequence of such action. Which means they cannot do it while you are driving or on the side of the highway.
Repo Men are also subject to the Fair Debt Collection Practices Act. We recently wrote another blog post about Debt Collection in Colorado. Anyone looking to repossess your property must follow those rules as well, which means they cannot:
• Misrepresent their identity
• Threaten you with legal action they cannot take or do not intend to take
• Harass you .
Violations by the auto lender and Repo Man are rarely actionable
If your vehicle has been repossessed, you may be pretty angry. Perhaps you never received the right to cure, or you had an altercation with the repo man. Unfortunately, violations of these laws are difficult to prove and, unless the repo man caused significant damage, are very likely not worth the attorney’s fees you’d have to pay to bring the action. In other words, suing for these violations is risky, unlikely to return much to you even if you win, and almost never worth paying an attorney to bring. And if you haven’t been paying your car loan, you almost certainly do not have enough to pay an attorney for a lawsuit that is very likely not worth bringing. Also, violations of the law by the auto lender or repo man are not going to get your vehicle back.
Wink & Wink does not sue auto lenders or repo men! Please do not contact our firm if that is what you seek!!
What You Can Do After A Repossession
If your property is repossessed, let go of your anger and frustration and focus on what you can do. For example, you do have the right to redeem the property. That means that you can buy it back for every charge outstanding on the debt. This is unlikely to be of much use for most because, if you have the money to “cure” all the outstanding payments and fees, you probably would have been paying the vehicle loan each month. If you don’t have the cash, you can’t redeem the property.
Assuming redemption is not possible, you can request that the lender ‘reinstate’ the loan. This would entail you simply catching up on the missed payments to get the vehicle back, and then continuing to pay the loan as it comes due going forward. You do not have a right to ‘reinstate’ the loan in Colorado, which means you cannot force the lender to give you the car back by simply catching up the missed payments. But some lenders will allow you to ‘reinstate’ the loan and it is certainly worth requesting if you the funds to catch up on the missed payments.
If you cannot redeem the property or reinstate the loan, then the lender has the right to sell it in any way that is “commercially reasonable” (more legalese!). You are supposed to receive notice of any sale, but failure to provide that notice isn’t enough to reverse the repossession, it’s just a no-no and there aren’t any real consequences.
After the sale, the lender will tally up the numbers. They are allowed to charge you for “reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing, and, to the extent provided for by agreement and not prohibited by law, reasonable attorney’s fees and reasonable legal expenses incurred by the secured party”. This means that they can tack on lots and lots of charges to what you already owe them under your contract.
If, by some miracle, they got enough for the vehicle at sale to cover all of what you owe them, you are entitled to a refund. However, what usually happens is that you still owe them money for the vehicle (which you no longer have), the cost of repossession, and a bunch of other fees. And they can sue you for that amount. It’s called a “deficiency judgment.”
To learn more about how to manage things after repossession, speak with a Denver bankruptcy attorney at Wink & Wink. We serve the greater Denver area and have helped hundreds minimize the damage after repossession.
Bankruptcy Can Help
If you are facing repossession or a deficiency judgment on a repossessed vehicle, bankruptcy does offer you protection. If you are behind on your payments, bankruptcy gives you the protection of the “automatic stay”, which prevents the lender from repossessing the vehicle for a time. It does not wipe out your obligation to pay under your contract, but it can provide some breathing room.
Some auto loans can be “crammed down” in a Chapter 13 bankruptcy to their fair market value, meaning you would only owe the lender what the car is worth today instead of your current balance. This option only applies to vehicles purchased more than two-and-a-half years before filing for bankruptcy, and requires a Chapter 13 repayment plan bankruptcy. If you are not eligible to cram down the loan, you can still pay it off at a reasonable interest rate in Chapter 13 bankruptcy. Whether you cram down the loan or simply pay it through a Chapter 13 plan at a reasonable interest rate, you must have possession of the vehicle when you file bankruptcy. Once the vehicle is repossessed, bankruptcy does not help you get it back.
And if your vehicle has been repossessed or you otherwise do not want to keep paying for it, bankruptcy can get you out of the deficiency judgment whether the car was repossessed or surrendered by you. And bankruptcy will wipe out the deficiency judgment regardless of whether the repossession or surrender happens before or after you file bankruptcy.
Repossession can be a stressful ordeal. If you are facing repossession or a deficiency judgment, call a Colorado bankruptcy attorney who offers free consultations to explore your options and find out if bankruptcy can help you.
Don’t wait. Speak with Wink & Wink, a Denver bankruptcy law firm, to find out how you can get much-needed debt relief from a deficiency judgment or to keep your vehicle prior to repossession. Call us today at (303) 410-1720, or contact us online. You can also get instant advice by filling out our online questionnaire.