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Mar
2021
6

Dealing With Repossession Under California Law

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

May
2020
12

Vehicle Repossession | FTC Consumer Information

Chances are you rely on your vehicle to get you where you need to go — and when you need to go — whether it’s to work, school, the grocery store, or the soccer field. But if you’re late with your car payments, or in some states, if you don’t have adequate auto insurance, your vehicle could be taken away from you.

When you finance or lease a vehicle, your creditor or lessor has important rights that end once you’ve paid off your loan or lease obligation. These rights are established by the contract you signed and the law of your state. For example, if you don’t make timely payments on the vehicle, your creditor may have the right to “repossess” — ­or take back your car without going to court or warning you in advance. Your creditor also may be able to sell your contract to a third party, called an assignee, who may have the same right to seize the car as the original creditor.

The Federal Trade Commission, the nation’s consumer protection agency, wants you to know that your creditor’s rights may be limited. Some states impose rules about how your creditor may repossess the vehicle and resell it to reduce or eliminate your debt. Creditors that violate any rules may lose other rights against you, or have to pay you damages.

Seizing the Vehicle

In many states, your creditor can seize your vehicle as soon as you default on your loan or lease. Your contract should state what constitutes a default, but failure to make a payment on time is a typical example.

However, if your creditor agrees to change your payment date, the terms of your original contract may not apply any longer. If your creditor agrees to such a change, make sure you have it in writing. Oral agreements are difficult to prove.

Once you are in default, the laws of most states permit the creditor to repossess your car at any time, without notice, and to come onto your property to do so. But when seizing the vehicle, your creditor may not commit a “breach of the peace.” In some states, that means using physical force, threats of force, or even removing your car from a closed garage without your permission.

Should there be a breach of the peace in seizing your car, your creditor may be required to pay a penalty or to compensate you if any harm is done to you or your property. A breach of peace also may give you a legal defense if your creditor sues you to collect a “deficiency judgment” — that is, the difference between what you owe on the contract (plus repossession and sale expenses) and what your creditor gets from the resale of your vehicle.

Selling the Vehicle

Once your vehicle has been repossessed, your creditor may decide to either keep it as compensation for your debt or resell it in a public or private sale. In some states, your creditor must let