Yes. Depending on your location in the United States, you can take action to repossess the property tied to the loan immediately the loan or credit account is delinquent.
Keep in mind that a good number of states legally permit a lender to repossess a car without giving any form of prior notice as long as you have a valid financial interest in the vehicle. Most often, borrowers sign a security agreement when looking to finance a car acquisition.
Within the security agreement, there is usually a clause that allows the lender to repossess the car without notice in line with the law particularly when payment of the loan has been defaulted.
Nevertheless, repossession of the car should not breach the peace. To ensure you do not breach the peace, the repossession company ideally prefers to repossess the car when the individual is away from the car or asleep.
Correct Procedures for Repossessing a Car
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Review the Loan Agreement
Before taking any steps to repossess a car in the United States, it is recommended you first take your time to extensively go through the loan agreement.
Make sure that the borrower has legally defaulted on the terms and conditions as stated in the contract. Some of the primary reasons or justifications for repossession are non-payment or late payments.
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Provide Notice to the Borrower
Although this might not always be necessary, there are states in the United States that mandate lenders to provide the borrower with a notice of default before initiating repossession.
This notice is meant to let the borrower know about the specific terms that have been violated and also allow them to find or proffer a solution to the already existing problem.
Keep in mind that the duration for the prior notice as well as the method of notice delivery can vary from one state to another.
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Check State Laws
It is also important you understand everything there is regarding repossession laws in the state where the car is located. States are known to possess varying requirements when it comes to notification, repossession methods, or even the borrower’s rights all through the process. Keep in mind that not complying with these regulations will indeed lead to legal consequences for the lender.
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Coordinate with a Repossession Agent
More often than not, lenders in the United States contract the services of professional repossession agents to reclaim the vehicle.
One thing to note is that these agents are properly educated and trained to comply with all requisite procedures when repossessing a vehicle and might as well have access to tools such as towing equipment. Nevertheless, you will want to verify that the repossession agent is licensed and bonded, as mandated by law.
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Repossession Methods
Just as was noted above, repossession of the car without notice is possible as long as it doesn’t in any way breach the peace. This simply entails that repossession agents are not allowed to use force, threaten violence, or damage property.
Aside from that, repossession will have to take place on public property, and agents are restricted from entering a closed garage without appropriate permission.
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Inventory Personal Belongings
After the vehicle has been repossessed, it’s pertinent to carefully inventory and store any personal belongings found in the car.
Keep in mind that a good number of states have well-stipulated regulations that cover the handling of personal property. Owing to that, after repossession of a car, you must ensure full compliance with these rules.
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Notification of Sale
Note that after repossessing the car, laws in the United States direct the lender to appropriately inform or let the borrower know of their intention to sell the repossessed vehicle.
Although these regulations will vary from one location to another, keep in mind that the notice will have to feature vital details regarding the sale, and this is to ensure that the borrower has ample time and opportunity to redeem the vehicle before it goes to auction.
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Selling the Repossessed Vehicle
This is one particular stage where a lot of lenders and repossession agents tend to get it wrong. In the United States, you have to understand that the sale of a repossessed vehicle is done via public auction.
Lenders are also expected to conform to state regulations, especially the ones that cover letting potential buyers know about the sale.
After the sale, also note that all remaining balance (deficiency) owed by the borrower will be pursued, although this will have to depend on state laws.
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Release of Liability
In the United States, after the vehicle has been sold, keep in mind that the lender is generally expected to provide the borrower with a notice that elucidates the sale and provides vital details regarding any remaining balance or deficiency.
This document is very important, especially for legal clarity as well as the borrower’s comprehensive understanding of their financial obligations.
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Documentation and Record Keeping
All through the repossession process, you would want to maintain documentation. This is very important, especially taking into consideration how quickly the case can escalate when there is little or no evidence to back your claims.
As such, you need to maintain records of all communication, notices sent, as well as steps taken during the repossession. Also, note that this documentation can be very essential if legal issues come up.