Breach of Contract

• When you bought your vehicle with credit, you signed a contract. The contract stated your responsibilities and one of them was to make your payments on time. Once you are late on a payment, you are in breach of contract and the loan company has a right to come and take your vehicle. State law also applies, and every state has different laws concerning repossession. You can check with your state's consumer protection agency to find out specific law. You also may have a case if the loan company has verbally renegotiated you loan with you over the phone, accepted a different payment schedule or accepted repeated late payments. In affect, they have changed your contract or made a new contract with you. You would need to consult an attorney to contact the loan company for you with these facts and you may be able to keep your vehicle, if you can catch up your payments.
  
  

Taking the Vehicle

• The loan companies have an interest in your vehicle and have the right to take it back if you don't make the payments. They do not need to go to court to do this, nor do they need to warn you that they are coming for it. They have the right to come onto your property; however, they may not have the right to enter a closed garage. This may constitute a breach of peace depending on the laws of your state. They may not damage your property, or threaten force. If these things occur and they are found guilty of breach of peace, you may be entitled to compensation for damages or they may lose the ability to get a deficiency judgment.
  
  

After the Repossession

• Once they come and take back your vehicle, they must inform you as to what they are going to do with it. They may keep it, in which case there is no deficiency. Or, they can sell it at public auction. In this case they have to try to get the highest price they can for the vehicle. If there is a difference between what they sell it for and what you owe, they will file for a deficiency judgment. This will go on your credit and they will add on any fees they incurred during the repossession process. In some states you have the right to redeem the vehicle, by paying up all late payments and fees to the bank, by a certain date. If your state has this law, you will get a notice from the bank with the sale date on it and you will have to redeem before that date. Always remember, the loan company doesn't really want to repossess your vehicle. If you find you are about to get behind in the payments, call them and try to work something out with them. It usually has a much happier ending.