What Does The Law Say?
In the state of Michigan, any motor vehicle, including boats, RVs, ATVs, motorcycles, cars, trucks, and even aircraft, can be repossessed without any court hearing or prior notice of any kind. It’s a strict law that can be enforced the instant a vehicle owners fails to “honor the loan agreement.” It’s not all bad though. Repossession agents are forbidden to enter into any home uninvited, rely on aggression, or use false pretenses to repossess any vehicle.
How Many Payments Do You Have To Miss To Have Your Car Repossessed?
Because the state of Michigan allows repossession from the time of initial breach of contract, it is entirely legal for a company to seek repossession even after a single missed payment. However, this is certainly not the norm. Most loan providers want to give you a second chance so they can continue to collect your payments, and will often work with you to catch up on payments missed without involving any repossession agents. The key to ensure your protection, though, is good communication. If you know you’re going to be late, or miss a payment, show good faith by reaching out and letting your loan provider know you’re struggling. Many times, they can push your payment date back, or give you a break on any incurred late fees. If you just keep missing payments and make no effort to contact them and explain why, however, you’re more likely to see a repo agent sooner than later.
Do You Owe Anything After Your Car Has Been Repossessed?
Whether or not you will owe money even after your car has been repossessed all depends on your vehicle, and current market value rates. If, for instance, your car has depreciated significantly and you owe more on the vehicle than it’s worth for resale, you may still be responsible for the difference. A loan provider may even choose to sue for the remaining balance. Most of the time though, you will need to work out a monthly payment plan. If you can’t pay that either, they may be entitled to seek judgment against you, in which case you might end up with your wages garnished and a pretty big hit to your credit.
How Can You Get Your Vehicle Back After It’s Been Repossessed?
Once your car has been repossessed, you will receive a notice with a specified amount of time for how long you have to recover your vehicle, which is typically no more than 15 days. You must settle all your debts and get back in your lenders good graces to do so, but it is possible. And no, you cannot simply file for bankruptcy to get out of having your car repossessed; it is prohibited under Michigan law.
Does Repossession Affect Your Credit? How Bad?
Obviously repossession happens when you neglect to make your loan payments, which means there’s no way to avoid it showing up on your credit report. That means anyone will be able to see it anytime they look at your credit, and there’s nothing you can do about it. The severity of the matter, of course, all depends on what you do after the fact. If your car is repossessed but you settle all debts and recover your vehicle quickly, that will also be reflected on your credit report. On the flipside, if you continue to shirk off the debt, and it goes to collections, there’s a good chance you’ll have a hard time finding any reputable lender willing to approve financing for you for a long time.
How Long Does It Take To Recover From Repossession?
When your car is repossessed, it can definitely hit your credit hard, there’s no doubt about that. How long you’ll suffer the blow, though, is a whole different story. The truth is, a vehicle repossession can remain on your credit report for up to seven whole years, as does your responding actions. If, for instance, you don’t pay back your loan right away, that too will go on your report and remain for the full seven years even after the debt is paid off.
What Happens When Your Car Is Repossessed?
Once again, if your car has been repossessed, you will have a certain amount of time to claim it, meaning paying off what is owed and showing your lender you’re ready to play by the rules. If you cannot reclaim it within the allotted timeframe, though, your lender will likely try to turn around and sell it as quickly as possible to cover what you owe them. If they can’t sell it for enough to cover your debt, you’re the one who’s on the hook for the difference.
Can You Park A Certain Way To Avoid Repossession? How?
While you might think you’re being smart by hiding your car so your repo man can’t find it, it’s a charade that likely won’t last long. Whether you try to lock your car in a garage, park it in a public parking garage, or hide it around the block, you’re only prolonging the inevitable. In fact, in many states it’s actually illegal for you to hide your vehicle with the intent to evade repossession. It’s just not a good idea.
How Long Will Someone Keep Looking For Your Car?
If your brilliant idea is to try and wait out your repo man, and hope he gets too tired of looking, think again. In most cases, the longer it takes them to find your vehicle, the more money they stand to make – sort of like an hourly wage. And if you think your lender is footing the bill for their time, you’d be mistaken there too. Whatever it cost to have your car repossessed is going to be tacked onto your outstanding balance.
How To Avoid Your Vehicle Being Repossessed?
The goal overall is to avoid repossession at all costs, which means if you’re at the point where you’re not sure where you stand with your lender, do yourself a favor and reach out. By keeping those lines of communication open, and giving them the chance to understand where you’re coming from so accommodations can be made, you can avoid any surprises. If the situation is really bad, and you know your vehicle is still worth a good amount, you can also choose to sell privately and use the money to pay off everything you owe all at once. Too far gone to sell? Your last hope is a voluntary surrender. It’s definitely not ideal, but if you’re sure your car is going to get repossessed anyway, it’s better on paper that you eagerly complied and made the initial effort to make things right.
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