Your vehicle is one of your most important possessions. Without it, you might lose your job or not be able to take care of your family properly. If you are like many working professionals, you don’t fully own the vehicle that you drive. It is a financed vehicle on which you make monthly payments.
Unfortunately, the vehicle itself is the collateral for the loan. If you start falling behind on your payments, you are at risk of the lender possessing the vehicle to recover what they invested to help you purchase that vehicle.
Once you have missed one or two payments or received a collection call from your vehicle loan provider, you will likely start to worry about when they will take more aggressive actions. How much notice can you expect to receive before the lender attempts to repossess your vehicle?
Vehicle loans have different rules than mortgages
People might confuse the rights that homeowners have with the rights of other borrowers with secured debts. Lenders have to send specific warnings before they can initiate foreclosure proceedings on a property that serves as someone’s primary residence. The same is not true for vehicle loans.
The lender is not required to give you any specific notice before they attempt to repossess the vehicle. Unless your contract imposes rules about communication or a timeline, how quickly the lender moves to repossess the vehicle will be at the company’s discretion.
Some companies will wait and give you an opportunity to catch up on payments. Others will act swiftly to prevent someone from hiding a vehicle to interfere with the recovery process. You are vulnerable from the moment your loan is out of compliance.
Bankruptcy can help prior to repossession
If you file the initial paperwork for personal bankruptcy before your lender repossesses your vehicle, the automatic stay will prevent the repossession of your vehicle until the courts make a decision in your bankruptcy matter or the lender goes to court to ask for special permission to proceed.
Once you believe that your financed vehicle may be at risk, bankruptcy may be one of the fastest options for protecting the vehicle while also addressing the financial issues that led to the missed payments in the first place. Learning more about bankruptcy and the repossession process can help you protect your most valuable assets during a time of financial hardship.