Consumer Law

What Happens Prior To A Repossession Actually Taking Place?

Occurrences Prior To Repossession

Although a repossession can occur with just one missed-payment, most of the ones that we see are usually about the time that the borrower would fall two months behind in payments. At that point, there have probably been phone calls prior to that point, and you would expect the creditor to start generating letters, particularly one that is called a “Notice of Intent to Repossess.” That’s usually the signal in Maryland that the creditor is now serious and close to a determination to take back the property. At that point, you can expect that efforts are going to be undertaken to repossess the property. Usually if there are no payments, no contact with the creditor after the notice of intent to repossess is generated and you can expect that there’s going to be an effort to retrieve the property within a week or two of that letter being generated.

The creditors don’t have to generate a notice of intent to repossess, at least not in Maryland, but most of the time, that is the standard practice. So, once that letter comes out, you can anticipate attempts to retrieve the property within a week or two after that letter. Once the property is retrieved, the creditor has to send out a notice advising the borrower that the property has been repossessed, where it’s being stored, and that the creditor has to keep the property at that location for 15 days. The borrower, at that point, has a right to bring the loan current and to take back the property. So, that’s an important right when a vehicle is repossessed because even though the loan may provide that once the vehicle’s repossessed, the entire amount remaining due on the car becomes due, under Maryland law, you have the right to reinstate the loan by simply paying the payments that are due currently and any late fees that have accrued. If you do that, within 30 days, you recover your property and then the loan is reinstated and you just go back to the normal terms. If you don’t do that, you can expect somewhere between 30 and 60 days that the creditor is going to sell the car. Before the car is placed for sale, the creditor is obligated by law to send the borrower a notice at least 10 days before the sale, and the time and place of the sale. The borrower has the right to attend the sale. If it’s not inconvenient, it’s a good idea to do that even if there is no other reason than to observe the sale.

After the sale is completed, the creditor will send out a “Notice of Surplus or Deficiency.” In the rare event where the car is sold and the sufficient proceeds are realized to pay off the loan and there is an excess, the borrower is entitled to recover that money because it’s his or her property that has been sold. But in most cases, there is a deficiency. In other words, there is a balance that remains due on the loan. Usually what we see is within three to six months after that notice of deficiency has been sent that the borrower has not made some arrangement satisfactory to the creditor to pay the deficiency, the creditor will then institute a lawsuit to recover the deficiency. That’s where our services really come into play.

Does A Voluntary Repossession Help Me At All?

The voluntary repossession is where you agree to turn in the car. Usually, if there is an involuntary repossession, there are going to be costs that are incurred by the creditor. For instance, the creditor has to pay the recovery company to retrieve the car. So, if the notice of intent to repossess is sent to you before that happens, the creditor ultimately has a right to charge you for that expense to you. However, by agreeing to a voluntary repossession, that expense may be avoided. I’ve had people over the years come in and tell me that the creditor told them that if they return the car in, they would forgive the balance of the loan or some part of the loan, but I’ve never seen that in writing and I’ve never seen a creditor do that for a borrower. I have seen borrowers “save” the costs of the repossession by a voluntary turn-in which reduced the costs of the repossession, but that really is the only significant financial advantage to a voluntary turn-in.

There may be other reasons to do the voluntary turn-in, perhaps avoiding embarrassment; having the car towed from a parking lot at your employer’s office or a place of business; or having a tow company come into the neighborhood and towing the car away in the middle of the day. But there’s really no legal advantage or disadvantage to a voluntary turn-in other than having worked out some kind of an agreement with the creditor or sparing a creditor the cost of having a third-party involved in the retrieval of the car.

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