Losing your vehicle can have a devastating impact, making it impossible to get to and from work, take the kids to school and activities, grocery shop, and even make it to medical appointments. But, repossession looms for far too many Americans. According to the Federal Reserve Bank of New York, more than seven million U.S. car loans were at least 90 days past due at the end of 2018. 9% of Hinds County auto loans are delinquent.
If you have an automobile loan and are having trouble keeping up with payments, it’s important that you understand when and how your vehicle can be repossessed, how you may be able to protect against repossession, and what you can do if your car has already been repossessed.
When Can a Car Be Repossessed in Mississippi?
Most lenders don’t repossess a car immediately when you fall behind on your payments. However, you should know that there’s no Mississippi law requiring a lender to wait a certain amount of time before taking your car back. The reason lenders often wait until you are two or three payments behind before repossessing your car is that it’s more profitable for them if you keep your car and continue to make payments. So, they’ll often wait 30 or 60 days to give you a chance to catch up or make payment arrangements.
That doesn’t necessarily mean you’re safe during that time, though. Unless your contract with the lender says otherwise, you’re in default as soon as your payment is late. The lender could choose to repossess at any time, even when your payment is a day or two late. Note, however, that title loans are subject to a different law, and different restrictions and procedures apply. For example, under Mississippi law, a title loan is considered to be in default and the lender has a right to take possession of the property serving as collateral when final payment is 30 days past due.
If your car loan is delinquent and you fear that you may be facing repossession, ducking calls from your lender won’t help. The first line of defense for most people who have fallen behind on automobile loans and other types of debt is to talk with the lender and try to work out a plan for catching up.
If you can’t come to an agreement with the lender and you don’t expect to be able to catch up quickly, it’s wise to begin exploring your other options, such as refinancing, selling the vehicle for enough to pay off the loan, or filing a Chapter 13 bankruptcy case to spread out payment of the past-due amount over a longer period of time.
How Does Mississippi Repossession Work?
In Mississippi, lenders are allowed to use “self-help” repossession. That means they don’t have to go through a legal process to repossess the vehicle–they can simply come and pick up your car. The only restriction Mississippi law places on self-help repossession is that the lender or agent carrying out the repossession may not commit a “breach of the peace” in carrying out the repossession. For example, a repossession agent might tow or drive your car away from a public parking lot, the street in front of your house, or even your driveway. But, Mississippi law does not allow them to damage property, break into a secured structure such as your garage, pull a person from the vehicle, or otherwise break the law in order to secure the property.
The lender also has the option of disabling the property without physically repossessing it. This practice is common among some “buy here, pay here” type of auto dealers, and typically involves equipping the vehicle with a device that allows the lender to remotely prevent it from starting.
How to Get a Repossessed Car Back
After an automobile is repossessed, the lender is required to notify the borrower and any third parties who may be obligated on the loan. The notification must be sent within a “reasonable time.” While what is deemed reasonable may vary, Mississippi law specifies that a notice sent after default at at least 10 days before the “earliest time off disposition” set forth in the notice is reasonable.
One piece of information that must be included in this notice is an explanation of your right to redeem the vehicle. Under Mississippi law, you have the right to redeem the vehicle at any time before sale by paying any past-due amounts plus expenses incurred in the repossession process. This amount will typically not be included in the notice, but the lender must provide you with a telephone number to call to get that information.
What if I Can’t Afford to Redeem My Car?
If you are not able to redeem your car by paying it current, then your next best option is likely to file a bankruptcy case and seek an order for “turnover” from the bankruptcy court. According to Ed Woods, the managing partner at Bond, Botes & Woods, P.C., you have a good chance of getting the vehicle back this way if you act quickly. This option requires the services of an experienced consumer bankruptcy attorney who must quickly file a bankruptcy case for you. According to Mr. Woods, you will also be required to show to the bankruptcy court that you have current insurance coverage on the vehicle.
If you can’t afford to redeem your car and you do not file a bankruptcy case quickly enough, your lender has a right to sell the vehicle as set forth in the notice. If your lender sells the vehicle and gets more than the outstanding balance of the loan plus expenses, you’ll get the extra money. However, that’s not usually how it plays out. Repossessed cars are often sold at auction for far less than the balance of the loan, meaning that you may still owe the lender money after your car has been repossessed and sold. The lender can file a lawsuit against you to collect the remaining balance unless you file a bankruptcy case.
If you are facing repossession or your car has been repossessed and you are unable to redeem the vehicle, it may be time to talk with an experienced bankruptcy attorney. Depending on your circumstances and your goals, bankruptcy may offer the solution you’re looking for. For instance, if a lender is pursuing you for a deficiency balance–the amount still due after a repossession– then a bankruptcy case filing will stop the lender from pursuing you for that deficiency balance.
Whatever your goals, learning more about your rights and options is a smart first step. Timing may be critical, especially if your car has already been repossessed. Fortunately, you can schedule a free consultation right now. Just call 877-581-3396 or fill out the contact form on this site.
Ed Woods is the Managing Attorney of several of the Bond & Botes Law Offices throughout Mississippi. He holds a Bachelor of Science from the University of Southern Mississippi, and a Juris Doctorate from Mississippi College School of Law. Ed puts his extensive knowledge of bankruptcy law to use defending consumers from debt collection lawsuits and more. Read his full bio here.