New Jersey has some of the harshest repossession laws in the nation. It also is one of the states where you most need a car to get around: most people can’t get to work here without a car, as public transportation is spotty and few places in New Jersey are particularly walkable or bikeable.
That means if you’re behind on your car payments, you need to know the risks and the options so you can make the right next move.
Your car can be taken any time you’re in default.
That means in New Jersey, your car company can repossess your vehicle if you miss even one payment. They don’t have to give you a warning or a notice of any kind. Your loan may come with a grace period, but you’ll have to make your payment within that grace period to stave off the threat of repossession.
Once the lender has the car they can sell it to pay off the balance of the loan, but the chances your car will cover the loan is pretty slim. Most people end up with a deficiency balance after a repossession, which means they still owe thousands of dollars but no longer have a car to help them get to work.
It’s a dire situation.
There are ways to get the car back after a repossession, but you’ll have to reinstate your contract before the date of sale. You usually only have about 15 days to make that happen. You’ll have to pay all the payments that are in arrears, and you’ll have to pay all the repossession fees. If your loan contract has an “acceleration clause” then your lender can demand you pay the entire balance on the loan then and there. Few people who are in enough financial trouble to miss a car payment have the resources to pay off an entire loan that way.
Repossession companies must adhere to the Uniform Commercial Code (UCC), but that won’t stop a repossession in most cases.
The repossession company may not threaten you, use force, trick you, damage your property, or enter your home (including locked garages or gates) without your permission. They may not use violence to take your car. They also may not trick you into bringing your vehicle into a shop for the purposes of keeping the vehicle.
You can’t breach the peace to keep your car either, and if you try to stop the repossession by keeping the car locked in your garage you might find your lender just adds fees to your balance.
Voluntary vehicle surrender might not help.
There are some advantages to voluntary surrender if that’s the route you’re going to take. For one thing, you’ll know exactly when the lender is coming for the vehicle, which can prevent embarrassments and unpleasant surprises.
You’ll still owe a deficiency balance after the lender sells the car, and the lender may still turn that balance over to a collection agency. That means your credit will get worse, you could get sued, and you still won’t have a car. The credit report will list the surrender as voluntary, which is marginally better than a repossession, but the advantages are very slight.
Bankruptcy can stop vehicle repossession in its tracks.
Bankruptcy brings you under the protection of an automatic stay, which means that all collection activities must stop, including repossessions. If you act fast enough you might get to keep your car.
If you’ve already missed a car payment, don’t wait for the repo man. Contact our office to schedule a free consultation today.
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