HUNTSVILLE, Ala. — It's becoming more and more common for individuals to miss auto loan payments.
In September, Bloomberg News cited Fitch Ratings report saying 6.11% of auto borrowers across the country, were at least 60 days late on their auto payments.
And if your vehicle becomes repossessed, there are some things you need to know.
According to North Alabama Bankruptcy Attorney Joseph Pleva, if you have signed a lien with a creditor and you end up missing payments, that puts you at risk of repossession.
"Repossession is when somebody does default on their car payment. Legally, the car creditor has the right at that point to come and take the vehicle, sell it and apply it to the amount of money that the person owes," Pleva said.
Missing a payment, even by one day, gives creditors the right to repossess your vehicle at any point without notice.
"It can happen while people are at work. It can happen in the middle of the night," Pleva said.
But the repossession must be done peacefully, and they can't remove the vehicle from inside your garage without permission.
Attorney Pleva shares that filing bankruptcy before repossession happens, could temporarily stop it.
"If a client comes in to see me and they're saying that they're a month, two-month, three months behind and they're worried about their car being repossessed, filing the bankruptcy can stop that," Pleva said.
If they do end up repossessing your vehicle, "they have to send you a notice saying that the vehicle has been repossessed. Here's where it is. They also have to give you the opportunity to get back any personal property that's in the vehicle."
Creditors will also send you your right to get the vehicle back, but in Alabama "if the vehicle has already been repossessed. They're not necessarily able to get it back in this state."
Oftentimes in order to get it back, although not guaranteed, you'd to need pay off the entire balance owed on the car, not just the amount you are behind.
These creditors are also required to share when the vehicle will start being sold elsewhere, when the vehicle sells, and then communicate how much you still owe on the loan.
So, for example, if you borrow $30,000 on a vehicle and they repossess it, "when they sell it at a repo auction, whatever they sell it for will offset what you owe. But if, for instance, they sell the vehicle for $10,000, you still owe the $20,000," Pleva said.
After your vehicle has been repossessed and sold, creditors can sue you for the money you still owe.
Attorney Pleva recommends speaking with an attorney about your situation.