Of course, it is not possible to make a down payment on a large purchase, like a car. You need a loan. For this, you need to enter into a contract with your creditor. Take the loan, buy the car and become its proud owner.
But, is it yours for keeps, if you are still paying back the loan? Unfortunately, no. When you finance a car or any other vehicle, it is not yours till you have deposited your last loan payment or leasing obligation. Your creditors hold the rights on your car through a signed contract and by state law.
In Georgia too, unless you purchase your car outright in cash, your rights of ownership are limited in the state. This is because your creditors are the ones who have basically invested in your purchase. Hence, they have the right to hold title ownership until you meet the loan obligations. This is also what authorize repossession of car if you default on the loan.
The ugly side of payment default
If your car payments get delayed or you default on your contract, your creditors may repossess or take away your car. And, for this, they don’t even have to approach the court or warn you in advance.
What’s more, your creditor has the right to sell your contract to a third party and bestow the same rights to it for seizing your car. The rights of the creditor end once you have paid off all your loan or lease obligation.
Fortunately for you, default on payment and repossession is not such an open and shut case. The Federal Trade Commission, that is the nation’s consumer protection agency, limits these rights. In some states, the creditors come under rules that dictate how they can repossess the vehicle and resell it to reduce or clear the debt. In such cases, violation of any rule by creditors may make them lose other rights against debtors. They may even have to pay them damages.
Numbers say it all
If you think vehicle repossession by creditors is a rare occurrence, think again. In 2017, nearly 107 million Americans have taken an auto loan . Nearly, six million auto loans are 90 days or more behind on their car payments. This puts their vehicles at risk of getting repossessed.
In Georgia in 2014 alone, one in 91 car owners defaulted on auto loans. And they ended up surrendering their vehicles to creditors. This was a 70.9 percent jump from the previous year.
Negative impact of car repossession on the defaulter
Repossession can be most damaging to your credit score and puts a negative mark on your credit history. This may result in crippling your current finances and making it near impossible to raise affordable financing in the future.
What’s more, repossessions remain on your credit report for seven years. Although it can have a huge negative effect on your credit score, the damage gets reduced over time and is erased completely after seven years of your first payment default.
What to do if you are defaulting on payment?
Although your loan agreement with the creditor describes what it means to default on the contract, that is falling behind in your payment, the creditor may not be in a hurry to take back the vehicle. Most creditors would like to work with you.
This is because the value of a car depreciates quickly and it sells for much less than what could be realized through primary payment. Typically, a repossessed car will net the creditor only 30 percent of the loan value.
Thus, in case you think you will fall behind on your payments, discuss it with your creditor to avoid repossession. Take in writing whatever are the reworked payment arrangements.
Car repossession process
In most states, including Georgia, once you have defaulted on payment, creditors are permitted by law to seize your car at any time. They dont have to issue a notice for warning you. They hold the right to come onto your property for repossessing your car.
For example, the creditor, acting through a third-party vendor, can tow your vehicle from your driveway or even from your office, grocery store parking lot and any other private or public property. For this, the creditor doesn’t need a court order.
However, your creditors have no right over your property left inside the vehicle, such as laptop, jewelry, etc., when seizing the car. If your car is repossessed with personal belongings inside, they are dutybound to return them or you can approach the court to claim them.
Georgia repossession laws permit the creditor to hold your car as collateral and sell the car in the event of payment default. However, the Georgia car repossession laws also bind the creditors to follow rules that are designed to protect you when your car is repossessed.
In case you prevail upon your creditor to change your payment date, it nullifies the terms of the original contract. These may not apply any longer. So, it is important that you take changes in writing since oral commitments are difficult to prove in court.
Circumstances which prevent repossession
● Breach of peace
According to Georgia Code Section 11-9-503, the creditors cannot commit a ‘breach of peace’. So what does this mean? Under no circumstances can they break into your garage to seize your car or remove it from the driveway after moving any other vehicle blocking it, etc.
If the creditors are unable to repossess your car without breach of peace, they are required to take the legal action for the same. However, you cannot hide your car for repossession in your garage to prevent them from seizing it!
What if the creditors breach the peace by threatening or using physical force against you or remove your car from your closed garage without your permission? The creditors will have to pay the penalty or compensate for any damage done to your property.
Such breach of peace may be of advantage in your legal defense, if your creditor has sued you to collect a ‘deficiency judgment’, that is, the difference between what you owe to the creditors as per contract and what they will get on resale of your car.
● Entering restricted areas
Creditors cannot enter into a restricted area to repossess your car without official authorization. The restricted areas may include airports, government facilities and others.
If you have defaulted on payment, the best course would be a voluntary surrender of your car in accordance with the terms of the National Credit Act. Even creditors prefer this, since it makes it easy for them to get their vehicle back quickly and without incurring much expenses. This, in turn, will also free you from the debt and help you purchase a more affordable vehicle.
Is anyone exempt from repossession?
The Federal government has given some concessions to the armed forces personnel, under the federal Servicemembers Civil Relief Act (SCRA). If you are a service personnel and on active military duty, and default on payment your creditors will need to get a court order before they can repossess your car.
The same rule applies, if you had signed the loan agreement before you went on active duty or had paid the first deposit before joining active duty. Since SCRA is complex and with you being on active duty, taking the help of a lawyer for car repossession is advised. A lawyer expert in repo laws in GA can keep you apprised about your rights under SCRA and offer legal protection.
What happens after repossession?
Georgia Code Section 10-1-36 spells out the actions following repossession:
● The creditor must notify you your rights to ‘redeem’ your car within 10 days of repossession unless you have renounced such rights in the agreement.
● The creditor must give you an opportunity to pay off balance loan to reclaim the car.
● You can demand the sale of your repossessed car via public auction. Creditor needs to notify the date and time of the sale for the same. Whatever is earned through auction is applied to your debt. If full amount is not realized through this sale, you will have to make up for the deficiency.
● You can bid for your vehicle in the auction and buy it. But this will not absolve you from paying any remaining deficiency balance.
● The creditor can get a deficiency judgment for the balance amount from the sale and realize the same by garnishing your wages, directing the bank to pay from your account, etc.
● If you are able to pay previous installments and stay current, the creditors may return your car.
If you have defaulted on car loan payment or your car has already been repossessed by the creditors, don’t lose any time in contacting attorneys, who are experts in repossession laws in Georgia. And who better to contact than David Galler, a repossession attorney in Atlanta, successfully running his three-decade-old Galler Law, a law firm based in Atlanta that is primed to offer whatever car repossession help is required.
Car repossession is a complex process under the Georgia law and is best left to the experts. Galler Law, a reputed law firm based in Atlanta, has expert attorneys well versed in repossession laws in Georgia. If you are at risk of losing your vehicle to repossession, don’t delay in contacting us. This may make a difference between your retaining or losing your dream car.
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