Vehicle Repossession Lawyer in Pennsylvania and New Jersey
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Vehicle Repossession Lawyer in Pennsylvania and New Jersey
Vehicle repossession generally occurs once a borrower is 60-90 days delinquent on monthly payments.
Vehicle repossession can occur once a borrower is even as little as 30 days delinquent on payments in accordance with vehicle sale contracts.
A vehicle contract is one that is is “secured” by the vehicle itself, the same as a mortgage is “secured” by a home/real estate.
However, in the realm of mortgages, there is a judicial process that exists which requires Notice, Filing a Complaint, Obtaining a Judgment, then the sale of the real estate.
The judicial process of mortgage foreclosure generally takes 4-6 months in Pennsylvania and New Jersey.
What Is Vehicle Repossession?
Vehicle repossession is a process wherein a lender reclaims possession of a vehicle when the borrower fails to make the required auto loan payments. This usually happens after the borrower has missed multiple payments and is in default on their loan agreement. Repossession typically involves the lender sending a repossession agent to retrieve the vehicle, often without prior notice to the borrower.
Once the vehicle is repossessed, the lender usually sells it, often at auction, to recoup the outstanding loan balance. The borrower may still be responsible for any remaining balance if the sale price does not cover the entire loan amount, known as a deficiency balance. If left unpaid, the borrower can be sued for the deficiency balance by their lender.
Additionally, repossession can severely impact the borrower’s credit score and make it more challenging to obtain financing in the future.
Voluntary Repossession
Voluntary repossession occurs when a borrower who is unable to continue making loan payments willingly returns the vehicle to the lender. This proactive step is typically taken to avoid the more severe consequences of involuntary repossession.
Voluntary repossession still negatively affects the borrower’s credit score and may result in a deficiency balance if the vehicle’s sale price does not cover the loan. However, it can sometimes lead to more favorable terms and lower fees compared to involuntary repossession. It is a good idea to contact a car repossession lawyer before pursuing this option.
How Does Repossession Work?
Automobile repossession works by allowing the lender to reclaim a vehicle when the borrower defaults on the loan. After missing multiple payments, the lender typically hires a repossession agent to locate and retrieve the vehicle, often without prior notice to the borrower. Once repossessed, the lender usually sells the vehicle, often at auction, to recover the outstanding loan balance.
If the sale price doesn’t cover the full amount owed, the borrower may still owe the remaining balance, known as a deficiency balance. Repossession also significantly impacts the borrower’s credit score and can complicate future financing opportunities.
How Long Does the Repossession Process Take?
The repossession process can vary in duration, but it typically begins after a borrower has missed several payments, often around 60 to 90 days of delinquency. Once the lender decides to repossess the vehicle, the actual repossession can happen quickly, sometimes within a few days.
Statute of Limitations for Auto Repossession in Pennsylvania and New Jersey
Pennsylvania’s statute of limitations on debt is 4 years for written contracts, oral contracts, open-end accounts, and promissory notes. This means that a creditor has four years from the date the debtor breached their contract or defaulted on their loan to initiate automobile repossession proceedings. If the creditor fails to file a suit within those 4 years, they will be barred from going through the courts to collect the debt.
New Jersey has the same statute of limitations on debt, specifically for car loans. Creditors have 4 years to file a suit with the court after the debtor defaults on their loan payments. However, for other types of debt, such as credit card debt, the statute of limitations is 6 years.
How to Avoid Repossession
To avoid repossession, borrowers can explore several strategies to manage their debt and maintain possession of their vehicle. We strongly recommend working with a skilled car repossession attorney to ensure you fully understand all of your options.
File for Bankruptcy
Filing for bankruptcy can also halt repossession, providing temporary relief through an automatic stay. Our experienced Philadelphia bankruptcy attorneys can help you save your car through this method.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy may discharge certain debts, potentially making it easier to afford car payments, but it does not eliminate secured debts like a car loan without surrendering the vehicle. Therefore, it can temporarily stop car repossessions, but it is not always a viable option for all debtors to save their vehicles.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, on the other hand, allows borrowers to reorganize their debts and create a repayment plan, which can include catching up on missed car payments over a period of three to five years. This can help the borrower keep their vehicle and prevent repossession while paying off the debt more manageably.
Become Current on Late Payments
One of the first steps is to become current on late payments. Communicating with the lender and catching up on missed payments can prevent the account from being considered in default, thus avoiding the repossession process. Many lenders are willing to work with borrowers who show a genuine effort to bring their accounts current. However, if the car has already been repossessed, you may have to pay repossession costs to get the vehicle back.
Reinstate the Loan or Redeem the Car
Reinstating the loan is another option, which involves paying off the overdue amounts in one lump sum to bring the loan current. This typically stops the repossession process and allows the borrower to resume regular payments.
Redeeming the car involves paying the lender the current market value of the vehicle in a lump sum, which can be a viable option if the car’s value is significantly lower than the loan balance. Our repossession lawyers may be able to help you negotiate with your creditors.
Refinance the Car Loan
Refinancing the motor vehicle loan can provide a longer-term solution by securing a new loan with more favorable terms, such as a lower interest rate or extended repayment period, making the monthly payments more affordable.
Negotiate With Your Creditor
Negotiating with the creditor is crucial. Borrowers can discuss alternative payment arrangements, such as a temporary forbearance, a reduced payment plan, or a loan modification, to avoid repossession and manage their financial situation better. Instead of the creditor selling your car for the fair market value, you may be able to get your repossessed car back through effective negotiations.
Vehicle Repossession Lawyer in Pennsylvania and New Jersey – Sadek Bankruptcy Law Offices
Unlike the lengthy mortgage foreclosure process, vehicle repossession requires no official notice or court action. A borrower just 30 days behind on payments can find their vehicle and personal items repossessed without warning. This is especially devastating as people rely on their vehicles for daily activities.
Borrowers often report the vehicle as stolen because they may have been in contact with the lender and not far behind on payments. Many delinquent borrowers also face other debts like credit cards and escalating mortgage or rent expenses.
For over 20 years, Sadek Bankruptcy Law Offices has helped clients reorganize their debts and reclaim their vehicles through Chapter 13 Bankruptcy. This allows repayment of secured debt over 3-5 years, prioritizing it over unsecured debt. For example, a borrower earning $60,000 per year can have their repossessed vehicle returned and pay minimal amounts to unsecured creditors.
A key feature of Bankruptcy law is the automatic stay, which prevents any act to obtain or control estate property. Thus, a repossessed vehicle is returned once a Chapter 13 Bankruptcy is filed.
However, the Supreme Court’s 2021 ruling in City of Chicago, Illinois v. Fulton challenged this, stating that 362(a)(3) only prohibits affirmative acts that change the status quo of estate property. Despite this ruling, hundreds of successful Chapter 13 filings have resulted in the return of repossessed vehicles in New Jersey and Pennsylvania.
So far, creditors have consistently returned vehicles after Chapter 13 filings. If a creditor does not comply, a Motion for Turnover of the Vehicle can be filed, but this has rarely been necessary.
How to Fix Credit After a Car Repossession
Although repossession can hurt your credit, you can take several steps to rebuild your credit and improve your financial situation over time. Start by reviewing your credit report to understand the impact of the repossession and to check for any errors that may need disputing. Ensuring the accuracy of your credit report is essential, as any incorrect information can further harm your credit score.
To further build your credit, we recommend taking the following steps.
- Pay all remaining debts on time
- Build a positive credit history, perhaps by getting a secured credit card or a credit-builder loan
- Create good financial habits, such as budgeting, avoiding high-interest debts, and saving for emergencies
Repossession FAQs
How Long Does a Repo Stay on Your Credit?
A repossession stays on your credit report for seven years from the date of the first missed payment that led to the repossession. During this time, it can significantly impact your credit score, making it harder to obtain new credit or loans and leading to other financial difficulties. However, its effect on your credit score lessens over time, especially if you maintain good credit habits and work on rebuilding your credit.
How Many Car Payments Can You Miss Before Repo?
Typically, you can miss two to three car payments before facing repossession, but the exact number can vary depending on your lender’s policies and the terms of your loan agreement. Many lenders initiate the repossession process after about 60 to 90 days of missed payments. If you are unsure of when your lender can initiate the repossession process, contact our repossession attorneys as soon as possible.
Can You Get Your Car Back After Repo?
A car is a very important piece of personal property that, understandably, nobody wants to lose. However, you can often get your car back after repossession by redeeming it. This involves paying the full remaining loan balance plus any associated fees. Another option is reinstating the loan by paying off the past-due amount along with any repossession costs.
Contact a Vehicle Repossession Attorney in Pennsylvania and New Jersey Today!
If you would like to discuss your financial situation, call 215-545-0008 (Pennsylvania) or 856-890-9003 (New Jersey) for a free consultation with a lawyer. We look forward to helping you!
