When you finance a car purchase either new or used, you sign a contract that has rules as to what you must do while you are paying on the loan. As part of this agreement, you agree that if you don’t make your payments the lender can take the car back. This process is known as a repossession. It can be done through a court action or by “self-help”.
What does it mean to be “in default”?
You are in default if you miss paying two (2) consecutive payments by the due date. This information is found in your loan documents. If the payments are due more than once per month, a debtor will be in default after not paying for sixty (60) days. Failure to get car insurance or other requirements of your loan can be a default as well.
What is “self-help” repossession in Louisiana?
Under the law, a creditor can repossess motor vehicles and motorcycles directly without a court order but certain steps must be carefully followed.
- The loan for the car must state “Louisiana law permits repossession of motor vehicles upon default without further notice or judicial process”;
- You must be in default on the loan;
- Your creditor must send you a “notice of intent”.
What is the “Notice of Intent”?
Unless they sue you first, the lender must send a written notice to your last known address prior to repossessing your car. This notice of repossession must contain:
- Your name,
- Your last known address,
- A description of the collateral (car), and
- The statement: “Louisiana law permits repossession of motor vehicles upon default without further notice or judicial process.”
What actions can the lender do to get my car after a default?
They cannot use force, threats, or intimidation while repossessing your car. The lender can take your car from the public street. If it is NOT on public property, they cannot take it if they “breach the peace”.
What is a “breach of the peace”?
Louisiana law defines it as at least:
- An unauthorized entry into a closed dwelling either locked or unlocked; or
- If you orally protest to the repossesssor against the repossession prior to him seizing the vehicle
Another example is breaking into your yard or garage to get the car.
What about my stuff in the car when it is repossessed?
First, if you are in default, you should get all of your things out of the car as soon as possible. If your car gets repossessed before you can, you have 10 days from the repossession to contact your lender and ask to get your items back. Once you ask them, under the law they must give you back your items.
What if I don’t ask for my stuff in the car when it is repossessed?
If you fail to ask for your stuff back, then at the end of 30 days from the repossession your things are considered as abandoned and you no longer have a right to them.
What if I return to car voluntarily to the lender?
This is still a repossession and almost all of the rules still apply. But, you may reduce the costs of the repossession if you give up the car.
Can I get my car back once it has been repossessed?
This depends on your lender. There is no law in Louisiana that allows you to get it back. But, you can contact your lender to see about a repayment plan to get out of the default.
What happens next?
After repossession, the creditor will likely put the car up for sale at a public auction. Any money they get from this sale, has to be applied to the amount of the debt owed. But, cars at auction will almost always sell for less than they are really worth. So, after applying this money to the loan, there will be a balance owed which is called the “deficiency”.
Can I be sued on this debt?
Yes. The lender can sue you for the deficiency amount as well as interest, late fees, attorney fees, court costs, etc. Again, this is explained in your original loan documents.
Other information on repossession can be found at: https://consumer.ftc.gov/articles/vehicle-repossession
The information provided in this post does not, and is not intended to, represent legal advice. All information available on this site is for general informational purposes only. If you need legal help, you should contact a lawyer. You may be eligible for our free legal services and can apply by calling our Legal Hotline at 1-844-244-7871 or applying online here.