Stop Car Repossession

Getting Legal Help to Stop Repossession

When a debtor falls behind in secured payments (car loans, boat loans, etc.) the creditor may take the collateral, sell it, and use the money from the sale to pay the debt due. Repossession is usually carried out by the creditor without help from the courts or any state authority. Although this “self-help” repossession is legal in most states, the creditor must be sure that no law is being broken. A creditor may not break down a garage door to reclaim an automobile pledged as collateral for a loan, but a creditor may take the car from the debtor if the debtor leaves the car parked on a public street. (The law does not regard taking the car as stealing if the creditor already has been given the right to repossess the car).

Many people mistakenly believe that if a car is purchased with credit and the debt is not repaid, the worst that can happen is that the car will be repossessed. However, even though the creditor can legally collect only the amount owed plus the cost of credit, there are several ways to recover debt, whether dealing with a car or some other item.

Suppose the creditor is a bank in Georgia. A debtor defaults on a bank loan, but the debtor has money on deposit in the bank. The law allows the bank to take this money to pay off the amount owed. This action is called setoff.

A creditor can take a debtor to court for default. As in any court proceeding, the defendant (that is, the debtor) must be notified in advance. The defendant can present his or her case at the hearing.