You woke up in the morning and looked out your front window only to discover your car was gone. Or maybe you had just gotten off work or emerged from the store with a cart full of groceries. Your first thought may have been that someone stole your vehicle — until you remembered how far behind on your payments you were.
Car repossession is one of the most frustrating and humiliating experiences you can go through when you are struggling with your finances. You may be left stranded, unable to fulfill your obligations and forced into the tedious and expensive process of trying to get your car back.
The lender's right to repossess
The terms of your contract for your car loan spell out the process your lender takes for repossessing a car if you fall behind on your payments. In some cases, a loan contract provides no stipulation for warning you. Other lenders may send you a letter reminding you of your obligation to pay on time. Following that, they might call you to alert you to the possibility of losing your vehicle.
However, if you are behind on other debts and receiving calls and letters from collectors every day, you may have already begun to ignore the warning calls on your phone and letters piling up on your kitchen counter. Despite your very good intentions of catching up on your late payments, the lender has the right to take action and repossess your vehicle.
Your options to avoid repossession
The lender truly doesn't want to repossess your car and often is willing to work with you. To avoid repossession, you have a number of options, but none of these guarantees the lender will agree to suspend the process. Additionally, most of the alternatives to repossession have their own negative consequences, for example:
- Contact your lender as soon as you realize your payment will be late and attempt to negotiate an extension. Downfall: The lender may not agree to your offer.
- Request a change in your loan terms to reduce your payments. Downfall: Your lender will likely add fees.
- Sell your vehicle through a private sale. Downfall: You will likely not get what you need to pay off the car, and you will not have a vehicle.
- Agree to a voluntary repossession so the lender can sell the car at auction. Downfall: You may still owe the balance on the loan, and you will not have a vehicle.
Finally, if your debts are overwhelming you, and drastic measures such as repossession and foreclosure are on your horizon, you have the right to seek debt relief through Texas bankruptcy courts. Bankruptcy allows you to create a plan to repay a portion of your debt or, in some cases, to have your entire debt forgiven. This process may allow you to wake up in the morning and look out your window without dreading the day.