Know Your Rights!
If you have bought a vehicle on credit, chances are your creditor has retained important rights
over your vehicle. Contract law and the law of your state establish these rights. A creditor
retains a right until the last payment has been made under the contract. Any failure to make a
payment can result in serious consequences including repossession. Repossession is the when the
creditor takes back your vehicle without going to court or providing notice.
Creditors who decide to repossess are subject to limitations in exercising their right to do so.
State law places limits on how a creditor may repossess and ultimately sell the vehicle to remove
your debt. If creditors break the rules that apply to them, then they may lose rights against you,
and may be required to pay you damages - money.
According to state law and probably the contract you signed in purchasing the vehicle, your creditor
can legally seize your vehicle when you default on your loan. The seizure can legally occur
immediately. The contract between you and your creditor will usually define "default", but it
normally means a failure to make timely payments. One missed payment may be just enough but usually
not. This is because your creditor can agree to accept a late payment or can change the payment
date. This may change the terms of your original contract. These changes can occur by speaking
with the creditor, by writing, or by the creditor simply accepting multiple late payments without
When default occurs, state law may permit the creditor to repossess your vehicle at any time of the
day - even while you are asleep. Creditors do not need to give proper notice, and may come on to
your property to repossess.
Creditors cannot "breach the peace" while confiscating your vehicle. Examples of breaching the
peace violations can be using force or threats of force to repossess, seizing your vehicle over
protest, or removing it from a closed garage.
If a breach of peace is committed when your vehicle is repossessed, you can be entitled to money
damages or your creditor may be required to pay a penalty. Importantly, your creditor may also
lose the right to enforce a deficiency judgment against you. A deficiency judgment is the
difference between the remaining amount on the loan and the resell amount obtained by the creditor.
If you believe a creditor has treated you wrongfully, call Patrick L. Hayes at 612-821-4817 or
email him at
Remember, keep all copies of letters received by your creditor or lender and keep copies of letters
you have sent them. Accurate recordkeeping helps ensure your rights and defenses.