Owning a car is a necessity for most Tyler residents these days. It’s not unusual for families to need more than one car, when parents need to drive to work, take the kids to schools and activities, and run errands at nights and on the weekends. With those cars frequently come auto loans, and when borrowers run into trouble with their loan payments, repossession can result. Let’s take a look at some basic auto loan and repossession facts according to the Consumer Financial Protection Bureau.
Lenders do have the right to repossess your vehicle if you fall behind on your payments. They must do so without “breaching the peace.” This means they cannot break into your home or garage to get the car, they cannot threaten you and they cannot physically force you to surrender the car if you refuse. If they do breach the peace during repossession, you won’t necessarily get your vehicle back, but you can sue them. An award for damages could reduce the amount you will still owe your lender.
Repossession, unfortunately, will negatively impact your credit score. This will make it more difficult for you to obtain loans or new credit accounts in the future. It may also affect the interest rates you are eligible for. It could take seven years for the repossession to fall off of your credit report.
Tyler residents threatened with repossession who are unable to get current on their payments, even by refinancing or selling off the vehicle, do have an option available to them. Filing for Chapter 7 bankruptcy will stop repossession efforts with the same “automatic stay” that prevents other debt collectors from taking any action against you. Of course, bankruptcy is a major, irreversible decision with many effects. But when losing a relied-upon vehicle to repossession could also mean losing a job, children missing school or other serious consequences, it is important to weigh whether the fresh financial start obtained through bankruptcy is worth pursuing.