Seymour's Blog

"My Car Has Been Repo’d- Is There Any Way I Can Get it Back?"

I have been getting a lot of calls lately from frantic clients because when they woke up in the morning, their car was no longer in their yard. They haven’t been making their car payments for several months, but they thought that before their car was repo’d, they would at least have received some notice from the finance company that they intended to repo the vehicle.

The truth is that once you fall behind on your car payments, the finance company can pretty much repo your vehicle at any time, and they most certainly do not have to give you any advance notice.

In fact, if they gave you advance notice, you would probably try to hide the vehicle to avoid the repo, wouldn’t you?

So what happens after a repo?

The finance company normally has to notify you that they are putting your vehicle up for public auction, to be sold to the highest bidder.

Let’s say that you owe the finance company $15,000. Assume that the car gets sold at an auction for $8,000. This is a pretty realistic example, because when a car is sold at an auction, it is normally sold at a price far below what is owed to the finance company.

You might think that since the finance company has taken the car back, you no longer owe them any money. Guess what? The reality is that you owe them the difference between the balance due when they repo’d the vehicle, and the amount the vehicle was sold for at the auction. In addition to that, you will also owe the finance company for the costs they have to pay the repo agent..

Therefore, in this example, you owed $15,000, the car was sold for $8,000, and the repo fees were $500. The sad news is that you no longer have the car, and you still owe the finance company $7,500.

The finance company can now sue you for $7,500, plus lawyer fees and Court costs. When they obtain a judgment against you, they can try to collect on that judgment by freezing your bank account or attaching your wages.

Here is a little piece of good news. You can usually completely wipe out the debt by filing a successful Chapter 7 or Chapter 13 bankruptcy.

What if you love that car and want it back? If you take action before the car is sold, you can get it back. After the car has been repo’d, it is normally not sold for at least two weeks after the repo, and sometimes much longer.

If you really want that car back, you can file a Chapter 13 before it is sold. As long as you have full coverage insurance, the finance company is going to have to give you that car back.

Even better news is that in many cases you will be able to reduce your monthly payments. You might even be able to reduce the balance you owe to the finance company.

In the example we have used, what if you had the car for two and a half years, and it’s only worth $8,000? The great news is that you can get your car back and reduce the balance you owe from $15,000 to $8,000.

What if you have been paying 15% or more interest per year on that car loan? Even more great news. If you are paying more than 5% per year on that car loan, you can usually reduce your interest rate on that vehicle loan to about 5%.

So if your vehicle has been repo’d, don’t panic. It’s not the end of the world. There is a lot you can do to get your vehicle back. You might even be able to save a whole lot of money in the process.

Now you don’t have to wait for your vehicle to be repo’d in order to reduce your car payments. If you have financed your vehicle for more than two and a half years and it’s worth substantially less than what you owe, when you file Chapter 13 you can do something called a cram down. That permits you to substantially reduce the balance you owe, it also reduces your interest rate, and your monthly payments can be much lower.

I will talk a lot more about cram downs in future blogs.

A repo is not the end of the world. After clients see me and they learn all of this information, they are often happy that their vehicle got repo’d, because they now learned that they can save a fortune on their car payments, and they never would have realized it before.

Sometimes bad news can be good news.

When you file a Chapter 13 and get your car back, you can usually wipe out all of your other unsecured debts such as credit card bills, medical bills, personal loans, utility bills, money owed to lawyers for legal fees, and you can even wipe out surcharges on your driver’s license and old income taxes in many cases.

I will have more information on all of these benefits in future blogs. Stay tuned.