If your car has been repossessed and you live in California, here’s what you need to know.
Most people think that if they don’t pay the car loan, the lender will come to repossess the vehicle. Once that’s done, they figure it’s all over.
That’s exactly what my client thought when the tow truck was hauling away his Ford Explorer. Fast forward a few months and he knows better.
Now, so can you.
When A Vehicle Can Be Repossessed
In the beginning, there’s a car loan. You miss a payment and figure that a delay of a few days won’t make a difference. With so many cars in California, it’s not uncommon to be late by at least a few days.
What you don’t know is that under California law, the lender can repossess your vehicle without any prior notice to you so long as you’re as little as one day late on payment.
In fact, the lender can repossess a car in California whenever there’s a default in the terms of the contract. That includes not only missing a payment but also an insurance lapse.
It’s a good idea to read the contract carefully so you can find the landmines.
Who Can Repossess A Vehicle
Under California law, the car finance company as well as a registered repossession agency can repossess your automobile.
In order to have authority to repossess the vehicle, the company must be licensed or registered with the California Department of Consumer Affairs, Bureau of Security and Investigative Services. You should always ask to see the license before surrendering your car to a repo agent, and verify that license with the California Bureau of Security and Investigative Services.
Place And Time Of Repossession (And The Shakedown)
A repossession agent in California can’t come into a private building such as a garage, nor can they enter a secured or locked area such as a gated driveway, without the permission of the owner of the premises.
Your car can, however, be repossessed from unsecured driveways, streets, parking lots, and other publicly accessible areas in California at any time of day or night.
You don’t need to be present when the vehicle is taken, so if you park on the street and go to sleep there’s a chance the car may be gone when you wake up.
If you happen to be present when the car’s being taken, you may be able to save the car by paying the balance due rather than losing your wheels. If that happens then you have the right to receive an itemized receipt, and the repossession agent is required to forward your payment to the car lenders.
Timeline After Repossession
Once the car is repossessed, the clock starts ticking.
California law gives the repossession agency 48 hours to give you a Notice of Seizure that provides you with the name and contact information of both the legal owner and the repossession agency.
You must also be given an Inventory of Personal Effects that includes a list of your personal property in the vehicle when it was taken, as well as information about how to recover your property and the amount of storage fees. The repossession agency must store your items for 60 days, after which all unclaimed property can be discarded.
One caveat about your personal property. Anything that’s been installed or affixed to the car such as that awesome audio system or custom rims – you’re not getting that back unless you negotiate with the lender directly.
Selling The Car After Repossession
Once the lender has taken the car back, they’ve got to take some action before they sell it.
Under California law, the lender needs to serve you (either personally or by certified or first-class mail) you at least 15 days’ written notice of intent to sell the vehicle.
This Notice of Intent to Sell must be served within 60 days of repossession, and gives you the right to ask that the lender delay the sale for 10 days.
Your Right To Get The Car Back
Not only do you have the right to get the car back and reinstate the loan when it’s repossessed, but California law gives you the opportunity to redeem the vehicle and reinstate your loan at any time prior to sale.
California Civil Code forces the lender to reinstate your loan if all past due amounts are paid, unless the legal owner can prove that you did one of the following:
- Provided false information on your loan application
- Hid the vehicle in order to avoid repossession
- Damaged, or threatened to damage, the vehicle in a way that reduces its value
- Committed, or threatened to commit, violence against anyone involved repossessing the vehicle
- Used the vehicle in the commission of a criminal offense
- Your right to reinstate your loan contract is limited to once every 12 months, and twice over the life of the contract.
What Happens After The Car Is Sold?
Theoretically, your lender could get more for the car at sale than you owe on the loan. I’ve never seen it happen, but anything’s possible.
If the sale of the vehicle results in a surplus, the surplus amount must be returned to you within 45 days of the sale.
If the sale does not net enough to fully satisfy your loan and other amounts due, you will be liable for the deficiency balance.
In order to collect the deficiency, however, the lender has to sue you for the balance due. They need to serve you with the Complaint, you get an opportunity to file an Answer, and you can fight it out in court.
Remember – Repossession Is Not The End
If you fall behind on your car payments, California law doesn’t leave you hanging.
You can cure the default and keep your car.
If you lose your car, you may not have to pay any deficiency.
And if you are sued for a deficiency, there are ways to defend the case.
So long as you’re proactive, things may not turn out so bad.