Car repossession is taking back a car after the owner defaults on their auto loan. Each state has different laws and regulations that dictate every step of the car repossession process from start to finish. Generally, the law relies heavily on uniform commercial code. The repossession law in Kentucky requires commercially reasonable repossessions, sales, and notice.
If you don’t make your car payments on time, your lender can repossess your vehicle without a court order. This process is called repossession. The lender can do this because your car is collateral for the auto loan, a type of secured loan. When you make a secured loan, you give the creditor ownership rights to the vehicle under car repossession laws.
Your rights as an auto owner and the process of vehicle repossession are different depending on what state you live in. Facing auto repossession can be terrifying. However, understanding how repossession works in your state and what rights you have can help. This article will explain what to expect and strategies to keep in mind as a car owner under Kentucky repossession laws.
Understanding Car Kentucky Repossession Law
What is Repossession?
Repossession is a legal process that allows a creditor to take back a vehicle from a borrower who has defaulted on their car loan. In Kentucky, repossession is governed by state laws that balance the rights of creditors and borrowers. When a borrower fails to make the agreed-upon car payments, the creditor may repossess the vehicle to recover losses. If you miss your car payments, your lender has the right to take back the car because it serves as collateral for the car loan.
How Do car repossessions Work?
The repossession process in Kentucky typically begins when a borrower misses one or more car loan payments. The loan agreement outlines the loan terms, including the borrower’s obligations and the creditor’s rights. If the borrower defaults on the loan payments, the creditor may send a notice of default informing the borrower of their intention to repossess the vehicle. The creditor may then hire a repossession agent to take possession of the car. This agent will follow the repossession process outlined in the loan agreement and Kentucky law.
What Triggers Repossession?
In Kentucky, repossession can be triggered by a borrower’s failure to make timely car payments. The loan agreement usually outlines the number of missed payments required for repossession. However, Kentucky law does not specify a set number of missed payments before repossession can occur. Additionally, the creditor may repossess the vehicle if the borrower breaches any other loan agreement terms, such as failing to maintain full coverage insurance. Review your loan agreement to understand what constitutes a default and what actions can trigger repossession.
How Many Car Payments Can I Miss Without Risking a Repossession in Kentucky?
The state of Kentucky looks to see if you are meeting the terms of your loan. Generally, a car loan is not customarily repossessed for being less than a month overdue. However, repeatedly missing payments or not maintaining full coverage car insurance will often cause a repossession. Understanding the car repossession process includes catching up on missed payments and negotiating with creditors to halt the repossession process.
Monthly payments are the primary requirement in auto loan contracts, but almost every loan includes maintaining full coverage auto insurance. If you’re not meeting the conditions, you are defaulting on your auto loan contract. This is when repossession can occur. Sometimes, repossession can occur after a single payment is a day or late.
Review your contract to understand what your lender views as defaulting on the loan and whether they offer a grace period. A grace period gives you more time to make up a missed payment.
Will I Be Notified Before the Repossession? How?
Once you do not meet the loan agreement, you are in default. Kentucky allows a repossession at any time without giving you notice. They will often notify the local sheriff within two hours after the repossession. But they won’t call you or send notice prior. If your loan is defaulted, your car can be taken without warning.
Kentucky state law statute of limitations for Repossessions
If the auto is repossessed, you will almost always be sued. You remain liable for a voluntary repossession. The statute of limitations does not limit how long they have to repossess the auto. It only limits how long they can delay filing a lawsuit after the repossession to get a deficiency judgment. The retail installment contract lawsuit must be filed within four years of the repossession under KRS 190.124 (1)(b).
(b) If the motor vehicle has been repossessed, voluntarily or involuntarily, four (4) years after the date the motor vehicle was sold or otherwise disposed of by the repossessing retail seller, sales finance company, or other owner of the retail installment contract; or
(c) If the maturity date is accelerated by reason of default, regardless of whether the motor vehicle has been repossessed, within four (4) years of the accelerated maturity date.
(2) The provisions of this section shall control over any contrary provision of KRS Chapter 413
How Can I avoid repossession?
Your best chance of avoiding a repo is to pick up the phone and call your lender as soon as you know you will be late or miss a payment. Your lender will often work with you and set up a new payment plan or temporarily pause your payments. Lenders usually lose money if they repossess, but they will repossess if they believe you won’t pay or their collateral is at risk.
Kentucky and most states say your car is up for repossession as soon as you are in default on two payments. Your loan agreement may list options for “curing your default.” This usually refers to catching up on the payments. Many lenders will allow you to pay an interest payment, which extends the loan to catch up.
If you can’t cure the default, you may want to refinance, sell the car, or file for bankruptcy. There are options. Consider seeking a free consultation with a legal professional to explore your options for preventing repossession.
What Can a Car Repossession Company in Kentucky Do?
The Uniform Commercial Code sets out the law for repossession. The lender cannot breach the peace. Entering enclosed private property without permission, moving an auto to get to the car, breaking into a garage, threats, and use of force are all breaches of the peace or forbidden methods to repo a car.
However, this often becomes a swearing match between the driver and the auto owner. Your home includes the garage and any enclosed or locked yard. A repossession can happen on a public street, where it is being repaired, or any open public area, such as a parking lot in a mall.
If you assault or threaten the repossession agent, you can be arrested. Repossession agents can repossess vehicles from public property but are legally restricted from breaching the peace or entering locked spaces without authorization. To enter an area such as a locked garage to take the car, the lender can get a writ of replevin, a court order often to a sheriff to enter the garage by force and take the auto. This court order requires a bond to avoid repossession mistakes.
Resisting the repossession often only temporarily stops the seizure. It will also add to your debt to the lender. Almost all auto loans allow the lender to add their legal and repossession fees to the bill. The repossession agent has a job to do, and the fact that you are a widow with four orphan disabled children will not prevent him from doing his job. You can record the event, but you will probably be forced to file a Chapter 13 if you want to recover the auto. You will rarely get the car back from the lender voluntarily.
Repossession Law in Kentucky: Get your car back and written notice.
The lender has to sell the auto in a commercially reasonable manner if they wish to collect from you later. However, many people will not be able to afford a legal battle and will often lose when sued and fail to defend the lawsuit. Most of these collection actions for a repossessed car are won by default. The lender usually works to garnish wages and bank accounts and attach any real property the debtor owns.
Videos do not lie about what happened and what was said. The burden of proof will often be on the debtor to prove whether the repossession was lawful. You should try to preserve any evidence, but if the repossession agent is following the rules, often the only way to get the auto returned is by filing a Chapter 13 or paying off the debt and repo costs.
What about the Personal Property in My Vehicle?
The lender or repossession agent has to give you 30 days to claim your personal property. However, often, personal belongings go missing. It is usually deemed abandoned if you do not retrieve your personal belongings, and the lender or agent will frequently dispose of it. Don’t leave personal property in the auto if you know the car is at risk.
What Happens at a repossession?
The creditor may be able to keep your car instead of selling it. If he sells the repossessed vehicle at auction, you should get a notice of the place and time of the sale.
Some buy-here-pay-here lenders will recover less than 2% of the amount they claim, which is owed on the loan balance. These lenders make most of their profits from the down payment you made at the lot on the car.
Regular lenders will sell the repossessed vehicle at auction. If the lender does not make commercially reasonable efforts to sell the car, it can become problematic for the lender to recover the default amount. Just because the sale has to be commercially reasonable does not mean the price will be fair or at the market value.
What do I owe after repossession in Kentucky?
You can still owe the total debt after a car is repossessed in Kentucky. Why?
The money from the sale is applied to sales and repossession fees. Storing a car may cost 200 dollars per day at some facilities. Repo and towing fees may be 1000 dollars or more. Additionally, storage fees can be added to the borrower’s note, increasing the financial burden. The proceeds from the sale are paid to the repossession fees and sales costs first and to your loan last.
Many repossessions do not cover the loan balance and result in a deficiency balance, especially if you have negative equity in the car and owe more than the auto is worth. The point of repossessing your vehicle for buy here pay here lots is often to recover the car so it can be sold a second, third, or fourth time. Frequently, the buy here pay here lot did not expect you to repay the debt.
Once the car has been repossessed, the only two ways that tend to work to recover the vehicle are usually to pay the balance of the loan plus the repossession costs or to file a Chapter 13 bankruptcy, which promises to repay the car loan over time. You can often lower the interest rate with Chapter 13 to about the prime rate plus 1-2%.
Wrongful Repossession and Borrower Rights
What Is Wrongful Repossession?
Wrongful repossession occurs when a creditor repossesses a vehicle without following the proper procedures or when the borrower is not in default. In Kentucky, wrongful repossession can occur if the creditor uses physical force or intimidation to take possession of the vehicle. Borrowers who believe they have been a victim of wrongful repossession may have legal recourse to collect damages or leverage to use in defense of any subsequent collection case. If you suspect wrongful repossession, it’s essential to consult with a law firm to understand your rights and options.
