Repossession is a process where a creditor (generally, someone who sells goods) takes possession of specific property after the debtor (usually the buyer or consumer) defaults on a contract. The right of repossession is created by contract and can exist in many different types of transactions. This article will focus on car repossessions.
Q: If I fail to make my car payments, how quickly can the creditor repossess my car?
A: Most agreements will specify that a “default” occurs as soon as the payment is late, although the creditor may give you a grace period to make up your payments.
Q: Must the creditor take me to court before repossessing my car?
A: Not always. Secured creditors can repossess (or have a “repo man” repossess) your car without a court order as long as there is no “breach of the peace.”
However, the creditor may take you to court in order to repossess your car. In such a case (called a “replevin” case), the court can immediately order you to return your car to the creditor. You must follow the court’s “replevin” order even if you had no advance warning about the case. To challenge the replevin order, you must file a hearing request with the court within five days of the date you receive the paperwork. You will also have to file an answer within 28 days if the creditor sues you to recover money you owe.
Q: Is there anything the creditor cannot do during the repossession?
A: The creditor cannot do something outside of court that is “likely to produce violence” or “reasonably tends to provoke or excite others to break the peace.” If the creditor “breaches the peace” in such a way, you can ask the creditor to leave and stop trying to repossess your car. If the creditor refuses, you should contact the police, explain the situation, and ask for an officer to come out to “keep the peace.” You must not, however, use or threaten to use force to stop the repossession.
Q: Must the creditor tell me that my car will be repossessed?
A: Generally, no, unless your contract requires it.
Q: What can I do to keep my car if I am behind in my payments?
A: If you cannot become current in your payments or make another arrangement with your creditor, you may be able to prevent the repossession by filing bankruptcy.
Q: What happens after the repossession?
A: Within five business days after the repossession, the creditor usually will send you at least two “default” notices explaining why your car was repossessed and what you must do to get it back. In order to get the car back, you can be required to pay the past due amount along with the costs of the repossession (up to $25) and a deposit of up to two of your car payments.
If you cannot pay to get the car back, you will be notified that the car will be sold. This notice usually is sent at least 10 days before the sale and can be combined with the default notice described above. You must keep all notices sent to you because any errors in the notices may give you a defense if you are sued for the balance due on the loan.
In most cases, the creditor will try to sell the car and apply the money from the sale to the balance you owed on the loan and any repossession expenses. If the car’s sale price does not fully cover the money owed, you still may be sued for the balance due.
Q: If I voluntarily return my car to the creditor am I still responsible for anything I still owe on the loan?
A: Generally, yes, unless the creditor agrees not to hold you responsible. Such an agreement should be put in writing and signed before you return the car.
If you have questions about your legal rights or duties, you should contact an attorney. If you cannot afford an attorney, you should contact Ohio State Legal Services Association at ohiolegalservices.org or 1-866-LAW-OHIO for information about your local legal aid office.
This “Law You Can Use” column was provided by the Ohio State Bar Association (OSBA). It was prepared by Patrick Skilliter, staff attorney for Southeastern Ohio Legal Services in Zanesville.