The COVID-19 pandemic brought unprecedented financial challenges to individuals and families across the globe. During this period, many consumers faced job losses, reduced income, and increased financial strain. Despite financial relief measures and talks of paused repossessions, a significant number of individuals experienced vehicle repossession during the COVID-19 pandemic. This raises a crucial question: can they still repo cars during covid, and what are your rights if you’re facing this situation?
Even as some lenders claimed to offer temporary relief, the reality on the ground indicated a continued high rate of vehicle repossessions. Particularly as COVID-19 pandemic protections implemented by states began to expire in the Fall and Winter of 2021, many individuals found themselves vulnerable to aggressive repossession practices. This wasn’t limited to large financial institutions like Wells Fargo, Chase, Capital One, or Bank of America; credit unions and subprime lenders were also actively repossessing vehicles.
Many borrowers, grappling with pandemic-related hardships such as unemployment, childcare costs, or lost work hours, attempted to negotiate with lenders for lower or deferred payments. Unfortunately, even when borrowers proactively communicated their financial difficulties, vehicles were still frequently repossessed, highlighting the often-unforgiving nature of auto loan agreements.
Understanding Lender Repossession Practices
It’s important to understand that lenders primarily focus on payment adherence, irrespective of the reasons behind late payments. Lender systems are often automated, making repossession decisions swiftly, sometimes after just a single missed payment. Once a missed payment is registered, the system automatically triggers a repossession order. This order is electronically transmitted to a repossession agent tasked with retrieving the vehicle. Simultaneously, these automated systems report negative late payment and repossession notations to credit bureaus, immediately impacting the borrower’s credit score.
Proactive Steps if You’ve Fallen Behind on Payments
If you are facing difficulties in keeping up with your car payments, taking immediate and proactive steps is crucial. Here are three key actions to consider:
1. Communicate with Your Lender: Your first step should be to directly contact your lender – be it a bank, credit union, or financial institution. Initiate a conversation to explore options for postponing payments. Lenders might be willing to negotiate payment due dates or adjust payment amounts, especially when faced with documented financial hardship. Crucially, ensure that any agreed-upon changes to your loan terms are documented in writing. Whether you are dealing with a major bank like Bank of America or Capital One, a local credit union, or a subprime lender, written confirmation of any loan modifications is essential to protect your interests.
2. Explore Loan Refinancing: Investigate the possibility of refinancing your auto loan. Reach out to other reputable lenders to determine if you qualify for refinancing under more manageable terms. Refinancing could potentially lower your monthly payments, extend the loan term, or secure a more favorable interest rate, making your debt obligations more sustainable.
3. Seek Legal Counsel: Consult with experienced consumer protection attorneys. Firms like Flitter Milz, P.C., specialize in representing consumers against financial institutions in cases of wrongful repossession and violations of borrower rights. Seeking legal guidance can help you understand your rights and explore potential legal recourse if you believe your vehicle was improperly repossessed.
Key Takeaway: The most detrimental action you can take is to ignore the debt. Actively seeking a solution and communicating with your lender or seeking professional help are vital steps in navigating financial difficulties and avoiding repossession.
Your Rights After Repossession
Borrowers possess specific rights even after a vehicle has been repossessed. Understanding these rights is crucial to ensure fair treatment and address any potential misconduct during the repossession process.
Potential Areas of Wrongful Repossession:
- Wrongful Repossession: Was your vehicle repossessed in error? This can occur due to lender mistakes or miscommunication.
- Breach of the Peace: Repossession agents are legally prohibited from breaching the peace during a repossession. Did the repo agent use aggressive tactics, violence, or damage your property in the process?
- Improper Notices: Lenders are legally obligated to provide proper notifications following a repossession, detailing your rights and options. Did the lender fail to provide legally compliant notices after the repossession occurred?
- Credit Reporting Errors: Review your credit reports for inaccuracies related to the repossession. Are there errors in payment history, loan status, or the outstanding balance reported by the lender?
Repossession, Credit Reports, and Credit Scores
Vehicle repossession has significant negative consequences for your credit history and credit score.
Credit Report Impact: Repossessions are reported on credit reports and can severely damage your creditworthiness. It is imperative to meticulously review your credit reports for accuracy to ensure that lenders have correctly reported payment history, loan status, and outstanding balances. You are entitled to a free copy of your credit report from each of the major credit bureaus (Transunion, Experian, and Equifax) annually. You can obtain these reports by contacting the bureaus directly or visiting annualcreditreport.com.
If you identify errors on your credit report related to the repossession, you have the right to file a written dispute with the credit bureau. Your dispute should clearly outline the inaccuracies and be supported by any relevant documentation that substantiates your claim. Credit bureaus are legally required to investigate your dispute within 30 days of receipt.
Credit Score Deterioration: Defaulting on an auto loan and subsequent vehicle repossession will negatively impact your credit score. The repossession will remain on your credit report for 7.5 years from the date of your last payment. This negative listing will significantly lower your credit score, making it considerably more challenging to secure favorable terms for future loans, including mortgages, personal loans, and even credit cards.
Seeking Legal Assistance After Repossession
If you believe your vehicle was wrongfully repossessed or that your rights as a borrower have been violated, seeking legal help is strongly recommended. Consumer protection law firms, such as Flitter Milz, specialize in representing individuals who have experienced wrongful repossession of cars, trucks, motorcycles, RVs, and boats.
Contact Us for a free legal consultation to evaluate your situation and determine if your consumer rights have been infringed upon. Understanding your rights and seeking professional legal assistance can be crucial steps in addressing the complexities of vehicle repossession, especially in the aftermath of the COVID-19 pandemic.
Pictured: Cary Flitter (center), Andy Milz (left), Jody López-Jacobs (right).
