Vehicle Repossession In Delaware
When you finance or lease a car, truck or other vehicle, you usually give the creditor an interest in the vehicle to secure the loan debt. This interest allows the creditor to take your vehicle when you have missed loan payments and have not resolved the problem by contacting the creditor to work out an alternative payment arrangement. When the creditor takes your vehicle, it is called a "repossession." The creditor can repossess your vehicle without going to court and without prior notice unless your security agreement requires notice.
Table of Contents
- What should I do if I am unable to meet my car loan payments?
- Should I voluntarily surrender my car if I cannot make the loan payments?
- Do I have the right to cure the default if I miss car loan payments?
- If I am unable to cure the default on a car loan, do I have a right to redeem the vehicle?
- Could bankruptcy help me prevent my car from being repossesed?
- What should I do if I am unable to meet my car loan payments? (Permalink)
You can delay or avoid repossession of your vehicle, in some cases, if you talk to your creditor as soon as you realize that you will be late on a loan payment. When you contact your creditor, you should try to negotiate a modified payment plan or modification of the loan. You should ask the creditor to put any modifications in writing. This writing is generally called a "workout agreement."
- Should I voluntarily surrender my car if I cannot make the loan payments? (Permalink)
The creditor may ask you to voluntarily surrender the vehicle rather than wait for them to repossess. This surrender is known as a voluntary repossession. In general, you should surrender the car voluntarily only in exchange for the creditor giving up some right, such as, if the creditor agrees to waive its right to seek the remaining balance owed or agrees not to report the default to the credit reporting agencies. In addition to possibly negotiating more favorable terms of repossession, you might save money by avoiding repossession costs and attorney's fees through voluntary repossession.
- Do I have the right to cure the default if I miss car loan payments? (Permalink)
In most cases, you will not have a right to cure the default, which means that you will not be able to pay missed payments in order to get your vehicle back. You only have the right to cure a default in Delaware if your installment contract provides for a balloon payment and this balloon payment is the one that you missed. A balloon payment means a final loan payment that is much larger than the regular payments. If you have a right to cure the default on the balloon payment, then you have an absolute right to obtain a new payment schedule, and the payments under the new schedule must not be substantially greater than your original installment payments.
- If I am unable to cure the default on a car loan, do I have a right to redeem the vehicle? (Permalink)
If you are unable to cure the default, you still have an absolute right to redeem the vehicle any time before the creditor has sold or otherwise disposed of the vehicle. To redeem your vehicle, you must pay the total remaining amount of the loan due, not just the delinquent installments. Plus, you might have to pay reasonable repossession expenses and attorney's fees if any were actually incurred.
- Could bankruptcy help me prevent my car from being repossesed? (Permalink)
You should contact an attorney to find out whether filing a bankruptcy petition would be the best way to deal with your financial problems. As soon as you file for bankruptcy, Bankruptcy law automatically stops any threatened repossession. However, the secured creditor can later ask the court to lift the automatic stay so that they can proceed with repossession. In some cases, bankruptcy may allow you to recover possession of a vehicle which has already been repossessed. Bankruptcy law also provides you with options to cure defaults and redeem the vehicle which are more favorable than under non-bankruptcy law. For example, in certain circumstances, bankruptcy allows you to redeem the vehicle by paying the fair market value (current value) of the vehicle rather than paying the total amount remaining on the loan.
Vehicle Repossesion: Seizing the Vehicle
Does the creditor have a valid security interest in the vehicle?A creditor must have a legally enforceable security interest in the vehicle before they can seize it. "Security interest" means a legal share of the vehicle which secures payment of the debt. The security interest is created when you sign a security agreement with the creditor.
Vehicle Repossession: Selling the Car
Was the notice of sale proper? Although notice is not required prior to the repossession, the creditor must give you proper notice before selling the vehicle or otherwise disposing of the vehicle. Notice for private sale of the vehicle is slightly different than notice for a public sale.
Vehicle Repossession: Paying the Deficiency
Was the deficiency computed correctly?A deficiency is the difference between the amount owed under the security agreement and the amount the creditor is able to recover upon selling the vehicle after default. The money from the sale will reduce the amount you owe. If the creditor gets less money than you owe, you will still owe the difference. If the creditor gets more money from the sale than you owe, you will get a refund of the extra money and there is no deficiency.