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What Happens After Your Car is Repossessed

On Behalf of | Oct 23, 2015 | Bankruptcy Basics, Chapter 13 Bankruptcy

Hopefully you have read our prior blog titled “What you need to know about Vehicle Repossessions in New Jersey” for an explanation of what can and cannot occur when your car is being seized by your lender. This blog will focus on what happens after your car has been repossessed.

The lender’s sale of your vehicle

Once your lender has repossessed your vehicle, it is required to dispose or sell it in any “commercially reasonable” manner. This usually means that the lender should attempt to sell the vehicle for the highest price possible. Whether it is sold at a public auction or in a private sale, the lender must attempt to get the most they can for it. Your lender is required to provide you with at least 10 days’ notice prior to the sale. The consumer has the right to redeem the vehicle during this period by paying the lender the full balance due on the car loan, as well as the costs associated with repossessing the vehicle, storing it and selling it.

If you do not redeem your vehicle and it is sold for more than the amount owed on your loan (plus the lender’s costs), your lender must pay you the excess. If your vehicle is sold for less than what is owed on the loan, you remain liable to pay the lender the deficiency amount. The lender is required to notify you of the sale results and whether there was a deficiency or excess.

Can you get your car back?

It is important to take preventative steps before your car is repossessed. This may mean contacting your lender if you are going to miss a payment and working out a different payment plan or modifying your loan. You might want to voluntarily surrender your car if you can no longer afford it. The lender may accept the car as payment in full or at least cut you a deal to avoid incurring the repossession fees. If your car still has value, you may want to sell it privately in order to payoff your loan.

You should not attempt to hide your vehicle if you believe it is going to be seized. This is illegal and is merely a temporary fix to your problem. Additionally, if you do not have enough money to redeem your car after it has been repossessed, investigate obtaining a new loan with better terms and use the funds to redeem your car.

Filing bankruptcy

If your financial struggles include more than just your vehicle loan, you may want to consider filing a personal bankruptcy. As soon as you file your Chapter 7 or Chapter 13 case, the automatic stay goes into effect and halts all collection efforts against you. Additionally, your bankruptcy attorney can help you understand all of your options, including how to keep your car and other assets after your bankruptcy case has concluded.

We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..