What happens next? 1. Depending on your prior payment history, the lender may not be required to allow you to reinstate the loan by simply paying the past due amounts, plus the repo fees; If reinstatement is allowed, you will get a letter so stating. 2. What your credit report says is not relevant. Accounting rules compel a lender to reclassify a receivable/asset to a liability/bad debt when you reach a certain level of delinquency. If the lender determines that your account falls into that category, they will "charge off" the loan and change your credit report accordingly. A "charge off" does not mean they have given up trying to collect and it does not mean you get a free car somehow. 3. If the lender will not allow a reinstatement of the loan, you can only get the vehicle back if you pay off the balance in full. This is allowed because the lender has opted to "accelerate" the repayment plan. If you have access to a credit union perhaps you can refinance the vehicle there. Refinance may not be possible if you have little or no equity in the vehicle. 4. If you can't reinstate or payoff the loan in full, the lender will sell the vehicle (usually at auction) for as much as they can get. Any shortage left after the sale is called a "deficiency balance" for which you are responsible. 5. If you don't pay the "deficiency balance" the lender can sue and get a judgment against you. That judgment can be recorded and become a lien against any real property, including your home, if you own it. The lender can also garnish your wages and seize money in your bank accounts. 6. Depending on your overall financial situation, one of your best options is to file a petition for bankruptcy, either Chapter 7 or 13. You are advised to seek out the advice of an experienced bankruptcy attorney. Bankruptcy is more than checking boxes on forms you find online. Find/consult/hire a lawyer using the Avvo feature "Find a Lawyer". Make a list of 4-5 having many 5 star reviews from satisfied clients. If you don't get a prompt call back from one, go on to the next on your list. Some of us offer a free consultation by phone or in person. Because the bankruptcy process can be handled entirely by phone, email and fax, there is no need to personally visit the lawyer*s office unless you want to. Don*t be limited by the location of the BK lawyers you select. * *
Don't Panic if Your Vehicle Has Been Repossessed - You Can Usually Get it Back If You Act Quickly Many clients have called me, really scared and worried, because at about 4 a.m. in the morning they were awakened by the repo man who without any warning, surprisingly came to their home, woke them up, scared the daylights out of them, and towed their car or truck away. Although they were somewhat behind in their payments, they never expected a repo, and now they are in a state of panic because they have no idea what they can do. The good news is, it's not the end of the world, and they have legal options that will not only help them get their car back, but may also help reduce their monthly payments. Once your car has been repossessed, you need to act quickly. Time is of the essence. If you just stick your head in the sand and don't do anything, your car will be sold at an auction, and you could be sued for a lot of money. Just to give you a quick example, let's say you owe $15,000 to pay off your car. The finance company will usually send you a certified letter shortly after the repo. They will inform you that if you don't pay them what they want within 10 days, they will sell the car at an auction. Now let's be realistic. Do you think any bidder at an auction is going to bid $15,000 to buy your car? Only a very stupid bidder, and there aren't too many of those at car auctions these days. They are looking for a bargain basement price, and they probably won't bid more than maybe $6000 or $7000. So let's assume that the highest bidder pays the finance company $7000 for your car. What happens next? Well, if you think the finance company is going to be happy with that and never bother you again, well maybe you better think again. The reality is that the finance company will give you credit for $7000, and that means that you still owe them $8000. Next thing you know, you'll be getting a certified letter from them telling you that if you don't soon pay them $8000, they are going to sue you and take you to court. And when that happens, and they win the case, they can try to freeze your bank account, garnish your wages, and do all sorts of other things to make your life miserable. But wait. There is hope, if you act quickly. If you have just had a repossession, my advice is to immediately contact a lawyer that handles those types of cases, and preferably contact a lawyer who knows how to handle a bankruptcy case. If you do that, you will be happy to hear that all is not lost. A knowledgeable bankruptcy lawyer will let you know exactly what you can do to get that car back and get it back quickly. So if you'd like to find out how to get your car back after a repo, and how you can probably reduce your monthly payments, why just not continue on to the next section, and you may be happily surprised to know that even though you have had a vehicle repossessed, you have many legal rights that you may never have known about. Here's What You Need to Do to Get Your Car Back Quickly The good news is that if your car has been repossessed, and it hasn't been sold at an auction, you can probably get your car back quickly. It's really not that hard. Chapter 13 is a section of the United States Bankruptcy Law that helps people who are financial trouble. If you file a Chapter 13 case before they sell your car, and you also have proof of proper insurance coverage, the law provides that the finance company has to promptly return your vehicle. In most cases you will need to have proof of full insurance coverage. That means that you must have liability coverage, collision coverage, and comprehensive coverage. Once your bankruptcy has been filed, your attorney will make sure that your finance company receives proof of your bankruptcy filing. At that point you can usually make easy arrangements to pick up your vehicle from the lot where it is stored. Many repossession facilities are only open during limited hours. You will need to call them to make sure that they have received a release form from the car finance company, and that your vehicle is ready to be picked up. If the repo facility hasn't yet gotten a release form from the finance company they won't release your car, so make sure to call them in advance. Always find out what hours the repo facility is open, because if you come there even 5 minutes after closing, they probably won't give you your vehicle back. Don't expect them to be bending over backwards to help you. When you go to pick up your car, bring your cell phone so that you can take some pictures. Every once in a while vehicles can be damaged during a repossession. So please make sure to fully inspect your vehicle, and if there is any damage, take pictures, and report the damage to the person who is in charge at the vehicle storage facility. If there is any damage to your vehicle or there is personal property missing, make sure that you don't sign any forms that say your vehicle is in great shape and that there is nothing missing. If you follow these steps, getting your vehicle back after it has been repossessed should usually not be very complicated or difficult. If you have any questions, feel free to contact us, and we will be happy to help guide you along the way. Now once you have that vehicle back in your possession, well you're going to have to make sure that you make payments every month in the future so that you can keep your vehicle. In the next section, we will explain to you how you can hopefully save a lot of money in the future. If things work out well for you, you might be able to substantially reduce your monthly car payments, and in the next section we will tell you how an attorney can save you a lot of money by doing something called a "cram down" on your car. Now That You Have Your Car Back, Let's Help You Save Lots of Money on Your Future Car Payments Congratulations! You've gotten your car back, and it's in good condition. The repo people didn't damage it when they towed it away, and you have also gotten all of your personal possessions returned to you. So what happens next? Well, if you've got yourself a knowledgeable bankruptcy attorney, chances are that your attorney will have some good ideas as to how they can save you lots of money on your future car payments. The easiest way to illustrate this would be by giving you a specific example. Let's assume the following: 1) You owe $20,000 to pay off your car, and you have five years left on your car loan. 2) Your interest rate is 20%. 3) Your monthly car payment is $530. 4) You have owned the car for more than 2 1/2 years. 5) You were two months behind in your car payments when your car was repossessed. 6) The actual present retail value of the car is $12,000. In this example, here is what you can accomplish by having filed a Chapter 13 bankruptcy case: 1) You can substantially reduce the interest rate you pay on your car loan. By present day guidelines, you could reduce your interest rate from 20% to 5%. 2) If you paid this car loan off at 20% interest over 5 years, you would be paying back a total of $31,792. Of that amount, $11,792 would be interest payments. 3) Because you filed chapter 13, and you have owned the car for more than 2 1/2 years, you can pay the car loan off based upon the "cram down" value of the car. Here's what that means. Instead of paying the car finance company $20,000 plus 20% interest totaling $11,792 over the next 5 years, you can pay them off at 5% . As you will soon see, over 5 years that will be a huge savings to you. That's bonus number one. Now, here's your second bonus. This also is huge. Believe it or not, you will not have to pay back the finance company the $20,000 that you owe them. Now before you get too excited, you are not going to get the car for free. But instead of paying them $20,000 plus 20% interest, you will only pay them $12,000 at an interest rate of 5%. So how does that happen? Well, the law provides that if the actual retail value of the car is less than what you owe the finance company, and you have owned the car for more than 2 1/2 years, then you only have to pay back the actual retail value of the car, which is $12,000, at the 5% per year interest rate. 4) So let's do some very interesting mathematical computations. Before they repo'd your car, you would have had to pay the finance company back a total of $31,792 over the next 5 years. But now you are going to be using the bankruptcy laws to your advantage. So instead of paying them back $20,000, you are going to pay them back $12,000. Instead of paying them 20% interest on $20,000 for a total of $11,792, you are going to pay them 5% interest on $12,000, which is $1587, for a total of $13,587. Instead of paying $530 per month, you will now be paying $227 per month. 5) Over 5 years you will save a total of $18,205. You will pay back $13,587 instead of $31,792 for that car. 6) Guess what. You are now in much better financial shape thanks to your car being repo'd and thanks to the very favorable Chapter 13 bankruptcy law. Congratulations! You Are Saving a Fortune Who would have ever thought that you could be so much better off after your car has been repossessed. The moral of the story is that if you know the law (or have a great bankruptcy lawyer that knows and understands the law), you can use your knowledge of the law to your advantage and save a ton of money. Just imagine if, just like in our example, you could reduce your car payments from $530 a month to $227 per month. That's cutting your payments by more than half. Oh, and one more thing. If you have a car that is worth a lot less than you owe on it, and you have owned it for more than 2 1/2 years, you don't have to wait for the car to be repo'd to take advantage of this "cram down" law. You can file a chapter 13 while your car is still in your possession, even if you are totally current with your payments. (If you have owned the car for less than 2 1/2 years, you can still file for bankruptcy, and you can still reduce your interest rate to 5%. You just can't cram down the payoff on the car to the lower actual retail value of the car. So you will still save money, but you won't save as much as if you had owned the car for more than 2 1/2 years). And as yet another bonus, when you file chapter 13 you can usually wipe out a lot of your other bills such as credit cards, medical bills, utility bills, cell phone bills, lawyer fees, surcharges on your driver's license, pay day loans, some old income taxes, and many other debts. You can also stop foreclosures and sheriff sales, stop any lawsuits against you, release money from frozen bank accounts, and stop wage garnishments. So realize that bankruptcy is not a bad thing. It is based on the United States Constitution and the Old Testament Book of Deuteronomy, which teaches about debt forgiveness. I expect that close to 2 million people may be filing for bankruptcy this year. There is no shame or stigma in filing for bankruptcy. The main purpose of bankruptcy is to give people the opportunity for a fresh financial start. It certainly worked very well for Donald Trump. According to the records, he filed bankruptcy for some of his business corporations at least six times. I told that to one of my clients recently (she felt a little funny about filing for bankruptcy), and once she heard about Donald Trump, she perked right up, she smiled, and she said, "Well, now I feel very presidential." So remember that the bankruptcy laws are here for your protection, so don't be afraid to use the laws for the purposes for which they were intended. That's what smart people do. And don't worry about the big banks. They make billions and they are not going to be upset if you file for bankruptcy. They know that close to 2 million people have been filing for bankruptcy on a yearly basis, and they factor all of those statistics into their profit margins. So please accept my best wishes on your fresh financial start. You deserve it.
Does the Additional Default Remedies Act Apply to Me? First and foremost, in order to lawfully repossess an automobile, you must be a "secured party". The relevant definition of a secure party is as follow: "a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding." Put simply, the agreement signed between your dealership and the auto purchaser must grant to the dealership a security interest. Fortunately, the majority of purchase agreements include these provisions, but consult your attorney if you are unsure. A secured party may also be a vehicle lessor for purposes of the Additional Default Remedies Act. If you are a secured party, you must also qualify under one of the following categories: (1) Financial institutions chartered under the laws of the State of Louisiana, another state, or the U.S. (2) Persons licensed or regulated as lenders by the commission of financial institutions pursuant to the Louisiana Consumer Credit Law, R.S. 9:3510, et seq. (3) Persons licensed or regulated as lenders by the Louisiana Motor Vehicle Commission pursuant to the Louisiana Motor Vehicle Sales Finance Act, R.S. 6:969.1, et seq. Luckily, most everyone who dealer-finances the purchase of a vehicle will qualify under the third category, but again, if you are unsure, consult your attorney. The Purchaser Must Be In Default. After you decide that you are a secured party, the vehicle purchaser must be in "Default". Under the Additional Default Remedies Act, "Default" means nonpayment of two consecutive payments on the due date. However, in the event that payments are required to be made more frequently than on a monthly basis, default shall mean nonpayment for a period of sixty days. Generally, the first definition applies to auto loans. So, for example, if you finance a car and the agreement states that the first payment is due on March 12, 2017, then the purchaser will only be in default if he misses both the March 12, 2017 payment and the April 12, 2017 payment. Did I Send The Party In Default The Correct Notice? After you determine that the purchaser is in default, you must now send said purchaser a Notice. The notice must include the debtor's name, last known address, and description of the vehicle you intend to seize. The notice must also include the following sentence exactly: "Louisiana law permits repossession of motor vehicles upon default without further notice or judicial process." I recommend sending a formal letter via certified mail with return receipt requested including all of the foregoing so that you can prove the letter was received. (Although the statute only requires that you send the notice, not that they have to actually receive it). The Repossessor May Not Breach The Peace. In short, when undertaking a repossession, one may not breach the peace. A breach of peace shall include but not be limited to the following: (1) Unauthorized entry by a repossessor into a closed dwelling, whether locked or unlocked. (2) Oral protest by a debtor to the repossessor against repossession prior to the repossessor seizing control of the collateral. Best practice is to get written consent of the party in default before attempting the repossession, although, admittedly this is not always easy or even possible. Get A Licensed Towing Company. In almost all repossession cases a tow truck is inevitably involved. You must be sure that the company you hire possesses a common carrier certificate issued by the Louisiana Public Service Commission that allows them to do non-consensual tows. Do not be afraid to ask your towing service to provide proof of their credentials.
Default in Payments Only: Your car can only be repossessed for a default in payments. This is noteworthy because lenders in other states without this protection can repossess for other reasons, such as a failure to reaffirm the loan in a Chapter 7 bankruptcy. That is not the law in Massachusetts, though. 10 Days After Default: Before proceeding with a repossession, a car lender must wait until at least 10 days have passed from the date your payment was due. Notice of Default: Once 10 days have passed, the lender must send you a written notice stating that you have at least 21 days to catch up on your payments in order to prevent a repossession. The notice must state how much you are behind and where payment can be made. If the default is cured within this time period, then the lender cannot continue with repossession efforts. Please note, though, that you are only entitled to this notice 3 times during the course of a loan. If you default on payments a 4th time, this notice is no longer required. Involuntary Repossession: If the default is not paid, then the lender may hire a company to repossess your vehicle involuntarily. In its efforts to repossess, that company may not use force or breach the peace. It also cannot repossess a vehicle located on property that you own or rent unless you consent to their entry on your property. If a repossession would violate these rules, then a court hearing must first be held. 20 Days After Repossession: A repossessed car cannot be sold for at least 20 days after the repossession. During this time, you have a right of redemption, which is a right to get the car back by paying the defaulted amount owed (plus costs). The lender may require you to pay the loan in full only if it previously notified you that the loan was being accelerated. If you are unable to timely pay the redemption amount, then a Chapter 13 bankruptcy filing may allow you an extended timeframe to do so, along with a return of the car. Deficiency Amount: If the car is sold at repossession for less than the balance of your loan, then the lender can attempt to collect this deficiency amount from you. No deficiency is owed if the loan is discharged through bankruptcy.
HOW DOES IT WORK? A Title Loan is a form of short-term lending where you pledge your car as security. The interest rates are astronomical just like a payday loan. We often see rates of 125% or even as high as 200-300%. You give them the title to your car plus a key. That means if you default they can and will repossess your car. Typically they are short term loans, maybe 6 months. EXAMPLES OF THE COST OF THESE LOANS A short term loan of 6 months with monthly payments looks like this. You borrow $4,000 with interest of $125%. The monthly payment is $929.67. The total payment you repay is $5,578.03 including $1,578.03 interest! Another way is interest only for 6 months with the requirement to repay the principle at the end of 6 months. This is a balloon payment. The monthly payment is $833 per month and then a final payment of $4,000, all at once. The total cost is $8,998!! WHAT IF I DEFAULT? 1. The Lender can repossess your car and sell it at auction for dirt cheap prices. 2. Because the auction price is so low, you will typically owe a large deficiency. You owed $6,000 and they sell for $2,500; the balance to you is $3,500; 3. The interest rate continues to accrue on any balance owe deficiency; 4. The Title Lender sues for the balance. By the time they obtain a judgment you might owe $7,000. 5. If you are working they can garnish your pay check. 6. Also, they can garnish bank accounts and put judgment liens on your house. WHY BANKRUPTCY MAY BE A GREAT OPTION FOR YOU If you are in default on a Title Loan and want to keep your car you should consider a Chapter 13. When you file a Chapter 13: 1. You can repay your debts over a period up to 5 years; 2. The interest rate on your car loan (Title Loan) is about 5 to 6% instead of 125% or whatever the contract says; 3. If the car is worth less than you owe, you can pay just the value and still keep the car; 4. You can consolidate all of your debts into a more affordable monthly payment; 5. Unsecured debts (like credit cards) are generally repaid ten cents on the dollar or even less; 6. For qualified wage earners most Consumer Bankruptcy lawyers (like ours) will generally file your case with a small down payment; just a bit more than the filing fee. WHAT IF THE CAR HAS BEEN REPOSSESSED? If your Chapter 13 is filed before the car is sold it can be recovered. Please see our article on Automobile Repossession - How to get your car back: http://www.robertadamslaw.com/automobile-repossessions-get-back/ WHAT IF THE CAR HAS BEEN SOLD? If your car has been repossessed and sold you will likely still owe a great deal of money-and the interest is being added every month. You can consider filing a Chapter 7 or a Chapter 13. Consumer Bankruptcy firms as the ones on AVVO.com have helped thousands of good people like you to stop repossessions; get cars back when repossessed and stop all collections.
HOW DOES IT WORK? A Title Loan is a form of short-term lending where you pledge your car as security. The interest rates are astronomical just like a payday loan. We often see rates of 125% or even as high as 200-300%. You give them the title to your car plus a key. That means if you default they can and will repossess your car. Typically they are short term loans, maybe 6 months. EXAMPLES OF THE COST OF THESE LOANS A short term loan of 6 months with monthly payments looks like this. You borrow $4,000 with interest of $125%. The monthly payment is $929.67. The total payment you repay is $5,578.03 including $1,578.03 interest! Another way is interest only for 6 months with the requirement to repay the principle at the end of 6 months. This is a balloon payment. The monthly payment is $833 per month and then a final payment of $4,000, all at once. WHAT IF I DEFAULT? 1. The Lender can repossess your car and sell it at auction for dirt cheap prices. 2. Because the auction price is so low, you will typically owe a large deficiency. You owed $6,000 and they sell for $2,500; the balance to you is $3,500; 3. The interest rate continues to accrue on any balance owe deficiency; 4. The Title Lender sues for the balance. By the time they obtain a judgment you might owe $7,000. 5. If you are working they can garnish your pay check. 6. Also, they can garnish bank accounts and put judgment liens on your house. WHY BANKRUPTCY MAY BE A GREAT OPTION FOR YOU If you are in default on a Title Loan and want to keep your car you should consider a Chapter 13. When you file a Chapter 13: 1. You can repay your debts over a period up to 5 years; 2. The interest rate on your car loan (Title Loan) is about 5 to 6% instead of 125% or whatever the contract says; 3. If the car is worth less than you owe, you can pay just the value and still keep the car; 4. You can consolidate all of your debts into a more affordable monthly payment; 5. Unsecured debts (like credit cards) are generally repaid ten cents on the dollar or even less; 6. For qualified wage earners most Consumer Bankruptcy lawyers (like ours) will generally file your case with a small down payment; just a bit more than the filing fee. WHAT IF THE CAR HAS BEEN REPOSSESSED? If your Chapter 13 is filed before the car is sold it can be recovered. Please see our article on Automobile Repossession - How to get your car back: http://www.robertadamslaw.com/automobile-repossessions-get-back/ WHAT IF THE CAR HAS BEEN SOLD? If your car has been repossessed and sold you will likely still owe a great deal of money-and the interest is being added every month. You can consider filing a Chapter 7 or a Chapter 13. Consumer Bankruptcy firms as the ones on AVVO.com have helped thousands of good people like you to stop repossessions; get cars back when repossessed and stop all collections.