Falling behind on certain bills can be scarier than falling behind on others. For example, the delinquency of a secured loan may carry consequence of asset forfeiture that an unsecured loan does not. No one in Connecticut wants to go through the foreclosure of a house, but the repossession of a vehicle can be just as traumatic and embarrassing. Without a vehicle, one may lose the only means of getting to work or fulfilling family obligations.
The creditor who finances a borrower's vehicle can legally begin the process of repossession as soon as the loan becomes delinquent, that is, as soon as the borrower misses a payment. This is because until the borrower pays back the entire loan, the lender essentially owns the vehicle. Because many lending contracts include the understanding that the lender has the right to repossess the vehicle for non-payment, no court order is necessary for the lender to begin the process. The lender may not even send you a letter of warning.
Typically, after a car loan becomes delinquent, a creditor will contact an independent repossession contractor to locate and confiscate the vehicle, then sell it, usually at an auction, to recoup the balance of the loan. Connecticut law may prohibit a repossessor from coming onto private property or entering an enclosed or locked area to take the vehicle. State laws may place other restrictions on a repossessor, but such people are generally tenacious about locating and seizing the property legally.
Repossession of a vehicle can be a shock, and since it may happen in the middle of the night or while one is at work, it may leave the lender in a precarious and embarrassing situation. There are options to take to stop asset forfeiture and other consequences of overwhelming debt. Those who fall behind on debt payments may wish to seek the advice of a bankruptcy lawyer to determine if such steps are appropriate for their circumstances.
Source: FindLaw, "Right of Repossession Basics", July 16, 2017