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Car repossession: how it works in Pennsylvania

One way that individuals can get into financial trouble is when their car payments under a retail installment sales contract become too much to handle in light of the other monthly bills that need attention. A common recourse for the lender on an auto loan is to repossess the vehicle; but how is that done?

Before repossession becomes a possibility two things need to happen: the sales contract needs to include a provision stating that the seller has a security interest on the car, and the car buyer must have failed to maintain timely payments or otherwise be in breach of the sales agreement in such a way that the breach authorizes repossession under the terms of the contract.

If these prerequisites are met, then the auto lender can resort to "peaceful repossession" -- meaning that as long as the person effecting the repossession does not commit a breach of the peace during the repossession, it is not necessary to use the more formal and time-consuming method of legal process.

Assuming that the takes back the car by peaceful repossession, the next legal requirement is to provide the purchaser with a written notice of repossession. The notice must inform the purchaser of his right to reinstate the purchase contract, including an itemized statement of how much the purchaser must pay. It also needs to inform the purchaser that if the payment is not made, the car will be sold 15 days from the date of mailing the notice. Lastly, the notice needs to inform the purchaser that he or she has 30 days to claim any personal property that was in the car, or it too will be sold.

If the purchaser does not reinstate the contract within 15 days of the notice of repossession, the car lender can sell the automobile in a public or private sale or can opt to keep the car in full satisfaction of the loan if the balance of the loan is 60 percent or more unpaid (although if the purchaser objects in writing within 21 days of the notice, then the car must still be sold).

One way to at least temporarily stave off repossession and sale of the car is through the use of Federal bankruptcy law, particularly a Chapter 13 bankruptcy. A bankruptcy attorney can tell you more about how this can work if you are being subject to repossession.

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