Having your car repossessed is a very upsetting experience. Understanding the process, relevant statutes, and potential solutions is crucial if there is a possibility that your car will be repossessed.
In this blog post, we will explore how car repossession works in New Jersey, highlight key statutes governing the process, and discuss whether filing Chapter 7 or Chapter 13 bankruptcy can stop the repossession.
What Is Repossession?
In New Jersey, repossession refers to the process a creditor uses to take back possession of a vehicle or other secured property when the borrower defaults on their loan or lease agreement.
When you buy a vehicle, your lender is usually given a security interest in your car. This means that you have pledged your vehicle to the lender as collateral for the loan they gave you. Therefore, if you don’t make your payments or otherwise default on your loan, the lender can repossess the vehicle.
What Law Covers Repossession in New Jersey?
Here are some key points and provisions related to repossession in New Jersey.
Car repossession in New Jersey is governed by the Uniform Commercial Code (UCC), specifically Article 9 of the New Jersey Revised Statutes Title 12A:9-601 to 12A:9-628.
What Is The New Jersey Repossession Process?
Right To Repossession:
Under New Jersey law, a creditor has the right to repossess a vehicle or other secured property without going to court if the debtor has defaulted on their payment obligation.
What is Default?
In New Jersey, the terms of your auto loan determine when you are in default. You are considered in default when you don’t make your car payments on time or you violate any other condition of the lease or loan agreement, such as by not having adequate auto insurance.
A default can occur if you miss one payment. However, many loans give you a grace period, which gives you extra days to pay before you’re considered in default.
What Can Repossession Companies Do In New Jersey?
They Can Take Your Car Without Notice
A repossession agent can take your vehicle without giving you notice or getting your permission.
Repossession companies are governed by the Uniform Commercial Code (UCC). The UCC says that repo companies can repossess your car or render it unusable as long as they don’t breach the peace. They don’t need your permission to enter an unsecured driveway, private lot or any public space.
However, the agent is prohibited from breaking into a closed or locked structure such as your garage. The agent is allowed to seize your car with all of your belongings in it.
The repo agent cannot use force, threats, or physical confrontation during the repossession process. If a breach of the peace occurs, you may have legal recourse against the creditor. You also cannot breach the peace.
Once your vehicle has been repossessed, the creditor must give you a post-repossession notice. This notice typically informs you about the right to redeem the vehicle by paying the outstanding balance and any applicable fees.
Redemption and Resale
In New Jersey, you have the right to redeem a repossessed vehicle by paying the full amount owed, including any repossession and storage fees, before the creditor sells or disposes of the vehicle. If you do not redeem the vehicle within a reasonable time, the creditor may proceed with selling the vehicle.
Sale of Repossessed Property
If the creditor sells the repossessed vehicle, they must do so in a commercially reasonable manner. The proceeds from the sale are used to pay off the outstanding debt, including repossession and storage costs. If there is any surplus after paying off the debt, it must be returned to you. On the other hand, if the sale proceeds are insufficient to cover the debt, the creditor may pursue you for the remaining balance.
What Happens to My Personal Property in a Repossessed Vehicle in NJ
If you are at risk of repossession, take all your personal property out of your car! This way you don’t have to worry about getting it back. The repo agent will take your car and all your personal property that’s in it. They can charge you to store the personal items. Call the repo company as soon as you can and arrange to get your personal property back.
Can Bankruptcy Stop a NJ Repossession
Bankruptcy can potentially halt repossession through the automatic stay provision. When a debtor files for bankruptcy an automatic stay is issued which legally prohibits creditors from pursuing collection actions, including repossession.
However, it’s important to note that bankruptcy’s ability to stop repossession depends on the specific circumstances and the type of bankruptcy filed. Chapter 7 and Chapter 13 bankruptcies have different implications for repossession:
Chapter 7 Bankruptcy
While a Chapter 7 bankruptcy may temporarily delay repossession through the automatic stay, the creditor can seek relief from the stay and proceed with repossession if the debtor cannot pay what is owed. A Chapter 7 bankruptcy, on the other hand, will wipe out any shortfall owed to the creditor.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows people to reorganize their debt. Under a Chapter 13 bankruptcy you will be allowed to pay back the money you are behind through your bankruptcy Plan. You must be able to stay current on the payments as well. A Chapter 13 bankruptcy may also allow you to get back a vehicle that has already been repossessed.
CONTACT EXPERIENCED NJ BANKRUPTCY ATTORNEYS TO STOP YOUR REPOSSESSION
If you would like to learn more about stopping your car from being repossessed. or how filing bankruptcy can help you, contact the experienced NJ bankruptcy attorneys at Levitt and Slafkes today. During your free consultation, bankruptcy attorneys Bruce Levitt and Shelley Slafkes will carefully explain all your options so you can make an informed decision about how to best proceed. Contact us today at 973-323-2953 to schedule a free initial consultation with a compassionate and knowledgeable bankruptcy lawyer.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.