What to Know about Auto Repossession in New Jersey

Auto repossession can be an ugly, traumatizing business, not least because people struggling with debt often desperately need the car they can’t pay off to find employment that would help them pay it off. If that’s your situation here in Northern or Central New Jersey, don’t despair. Bankruptcy Attorney Douglas Mitchell can help. Be advised of the following, though.

Almost any time you purchase vehicles using credit, the lender/creditor “rides along,” so to speak, for the life of the loan. Pay back that loan in accordance with the loan agreement, and your lender/creditor will be a quiet, easygoing passenger. His only concern, after all, is getting his money back – with interest. Default on that loan, either by not making timely payments or failing to maintain insurance, and your passenger could get nasty.

The typical course of action is for the lender/creditor to repossess your vehicle. By law, he’s to do that “in a manner that does not disturb the peace.” In reality, peace is often mightily disturbed! Many debtors have found themselves having to endure an embarrassing public scene when their vehicle is taken from them, especially if the repossession leaves them stranded.

Once your lender/creditor has repossessed your vehicle, he must send you a Notice of Repossession and Right to Redeem. This gives you two options. It allows you either to catch up on missed payments if you can, or pay off the loan within a newly specified period of time. If you don’t – or can’t – reinstate the loan, the lender/creditor may, after so notifying you, sell your vehicle and use the proceeds to pay the loan off.

After the sale, the lender/creditor must provide you, the debtor, with an accounting of it. If the sale price covers more than the loan balance, plus costs and fees associated with repossessing, storing, and selling the vehicle, plus attorney fees, then the lender/creditor owes you the surplus balance. Don’t count on it, though. The more likely scenario, based on experience, is that the sale of the vehicle won’t cover the loan balance and costs – in which case you owe the deficit amount to your lender/creditor. This is called a deficiency judgment.

Complicated? Yes. Potentially traumatic and embarrassing? Yes. But there are ways to address your inability to make loan payments long before auto repossession becomes an option. Contact Mitchell Law Offices. Bankruptcy Attorney Douglas Mitchell – a seasoned debtors’ rights advocate here in Northern and Central New Jersey – can help you evaluate your situation and develop an action plan that makes auto repossession unnecessary.