In California, a lender can legally repossess your vehicle without suing you in court if you miss a payment or otherwise default on your agreement—by not maintaining car insurance, for example.
But lenders and repossession agencies don’t always follow the law. This gives consumers a possible legal remedy against the lender or the repossession company.
By law, the lender must provide you with:
- A post-repossession notice about your rights of reinstatement and/or redemption—even if you voluntarily surrendered your car or the repossession was conducted peacefully.
- A notice about the seizure.
- An inventory of any personal possessions that were in the car at the time it was repossessed.
If your vehicle has been repossessed or it’s under threat of repossession, keep reading to learn more about your rights and legal options.
How to Prevent Repossession in California
In California, lenders and finance companies can repossess your vehicle if you are even one day late on your car payment—they’re not legally required to give you a grace period.
Here’s what you can do to prevent vehicle repossession:
- 1. Pay the past-due balance immediately.
This is the fastest, easiest way to prevent repossession. Once you’re up to date on your payment, the lender no longer has the right to repossess your vehicle for payment default.
- 2. Work out a payment plan or late-payment arrangement with your lender.
Your lender may be willing to work out a payment plan with you or allow you to make a late payment, especially if you don’t have a history of late payments. It’s worth a try to call them and ask. Take detailed notes of all phone conversations and save all written and digital correspondences.
- 3. Ask an attorney if bankruptcy is a good option.
If you’re in serious financial trouble, bankruptcy may be an option. There are two ways to file: Chapter 7 or Chapter 13. An experienced bankruptcy attorney can help you determine whether bankruptcy may be a good route for you and which type of filing is best for your situation.
Lawful vs. Unlawful Repossession
If your car has already been repossessed, we know it’s a stressful time. Most people rely on their personal vehicle to get to work, shuttle kids to school, and get things done. If you can’t afford to purchase another vehicle or rent a car, you have rights.
If the repossession was lawful, you can still redeem the vehicle contract by paying off the vehicle in full before it is auctioned.
You may also be able to reinstate the contract by paying the amount required to bring the account up to date—plus any reasonable repossession expenses.
Bankruptcy is a good option if you cannot afford to pay off the total amount of the car redeem) or cannot afford to get current with the past due amount (reinstate).
Before you do anything, you need to determine whether the repossession was lawful in the first place.
- Lenders and creditors will sometimes repossess a vehicle even when the payments are current. If this happened to you, you are entitled to get your vehicle back and you may be able to collect damages (monetary compensation for harm resulting from the loss of your vehicle).
Repossession companies are not allowed to do the following when repossessing your vehicle:
- Threaten you or your family with physical violence or arrest during the repossession.
- Touch or harm anyone.
- Repossess the vehicle after you have told the agent not to (objected).
- Enter your home, including a closed or locked garage.
- Break any lock or gate.
- Bring the police, unless the finance company has a judgement against you.
If a repossession agent did any of these things when repossessing your vehicle, they breached the peace. You should consult with an experienced attorney who is familiar with repossession law in California.
What Are My Options After a Repossession?
If you purchased your vehicle in California, you have three options after your car is repossessed or you voluntarily surrender your vehicle:
Redeem the vehicle – This means you pay the entire balance due on your account plus late fees, collection fees, and reasonable repossession costs. Upon redemption, your car will be returned to you, and you will own it free and clear.
Reinstate the contract – This means you pay all past-due amounts, any late charges or fees, collection costs, and reasonable repossession costs. When the contract is reinstated, the car will be returned to you, and you will begin paying on the contract again as if there was no repossession.
File a Bankruptcy – You can file a Chapter 13 bankruptcy to pay off the whole car over 36-60 months or to pay off the past due amount over 36-60 months while you make the monthly payments.
Bankruptcy & Repossession
Bankruptcy may help you stop a repossession or get your car back. There are many things to consider before filing for bankruptcy. Talk to an experienced bankruptcy lawyer to find out if it’s the right choice based on your circumstances.
Chapter 7 Bankruptcy can stop a repossession or prevent the lender from auctioning off your car. However, Chapter 7 bankruptcy only stops the repossession temporarily. You must work out a repayment agreement with the lender or redeem the vehicle (pay off the car loan in full).
Chapter 13 Bankruptcy can help you get your car back and keep it after a repossession. But you only have 10 days to file Chapter 13 forms before the lender can legally sell the car, and you must pay the past due amount and continue making your payments on time.
Do I Need an Attorney for Help with Repossession?
An experienced attorney may be able to help you prevent repossession or get your car back.
Your repo lawyer can also speak with the lender and negotiate an agreement on your behalf. They may be able to obtain a more favorable outcome. In short, an experienced attorney will fight for your rights as a debtor.
You should consider hiring or at least consulting with an attorney if:
- 1. The lender wrongfully repossessed your car.
If your payments were current, for example, the lender has no legal right to repossess your vehicle.
- 2. The lender breached the peace during the repossession.
By taking your vehicle by force or despite your objections, for example.
- 3. You are in the military.
A lender must get a court order to repossess your car if you are on active military duty; you signed the loan agreement before you went on active duty; you paid a deposit or the first payment before you went on active duty, according to the Servicemembers Civil Relief Act (SCRA).
- 4. You want to avoid a deficiency judgement.
This is when the lender auctions your car for less than the loan amount and attempts to collect the difference from you. An attorney may be able to help you avoid a deficiency judgment.
Why Choose The Law Offices of Kevin T. Simon, APC?
Our attorney has successfully represented thousands of clients in Southern California dealing with bankruptcy and repossessions.
We are experts in Chapter 7 and 13 bankruptcy, offering both bankruptcy and non-bankruptcy solutions. Our mission is to help individuals ﬁnd debt relief solutions that help them get a fresh start.
Our team offers big-ﬁrm expertise at affordable rates—we know the last thing you need to worry about is how to pay legal fees. Get in touch with our bankruptcy lawyer in Woodland Hills for a free consultation today.
I didn’t receive a notice before the repossession. Is this legal?
Yes, in California a lender or finance company can repossess your vehicle without notice and without suing you in court, as long as they have a legally valid reason for the repossession.
However, the lender must provide you with a post-repossession notice about your rights of reinstatement and/or redemption, even if you voluntarily surrendered your car or the repossession was conducted peacefully. They must also provide a notice about the seizure and an inventory of any personal possessions that were in the car at the time it was repossessed.
How can I get my car back?
You have three general options. You can redeem the vehicle by paying the entire balance due on your account plus late fees, collection fees, and reasonable repossession costs, you can reinstate the contract by paying all past-due amounts, plus late charges, collection costs, and reasonable repossession costs, or you can file a Chapter 13 bankruptcy and pay off the car or amount you are behind over 36-60 months.
Do I own anything if I do not want the car back?
Very possibly. If you cannot afford to reinstate or redeem or you were leasing, the vehicle will be sold at auction. The creditor will apply the proceeds of the sale to your loan balance, and you will owe the rest. This is called a “deficiency balance.
However, you will not owe anything if you file a bankruptcy. It is vital to consult with a lawyer who specializes in this area to determine whether the post-repossession notice is valid. Our firm will do this during your free consultation.
I am being sued for a deficiency balance. What should I do?
If you have already been sued after a repossession, do not ignore the lawsuit. Even though you are no longer in possession of the vehicle, you may still be financially liable. Do not wait until the 30-day deadline is close or has passed to answer the complaint or you could lose your legal rights. Get in touch with a repossession lawyer immediately.
Should I get a lawyer after a repossession?
If your vehicle was repossessed or you voluntarily surrendered it, an experienced auto repossession lawyer can help you understand your rights and find the best solution for your situation, whether you want to get your vehicle back or you are being sued for a deficiency balance.