CAN I GET BACK MY VEHICLE UNDER CALIFORNIA LAW WITHOUT BANKRUPTCY?

Possibly.

Here's what happens after the Repossession.

Although there is no required priornotice of repossession, after the repossession you are entitled to written notices from two sources.

First, the repossession agency has 48 hours from the time of repossession to send you a Notice of Seizure. It contains the name and contact information of both your lender and the repossession agency.

By that same deadline the repo agency must also give you an Inventory of Personal Effects. Besides including a list of the personal property found in the repossessed Vehicle, this notice gives you information about how to recover that property and the amount of storage fees. If this notice is not sent properly, you can't be charged the storage fees.

Second, the lender must serve you (either personally or by certified or first-class mail) with a written notice of its intent to sell the vehicle. This notice must be served within 60 days of repossession, although is often sent within the first week or so. It must give you at least 15 days' notice of the intended sale. (See Calif. Civil Code 2983.2(a).)

That notice of intent to sell must lay out your options for getting back your vehicle, either by "redemption"—paying off the loan in full—or under most circumstances by "reinstatement" of the loan—catching up on the missed payments. You have 15 days to choose and fulfill the terms of either option if you want to get back your vehicle. You can request in writing that this period be extended by 10 days and the lender "shall without further notice extend the period accordingly."

HOW DOES CALIFORNIA VEHICLE REDEMPTION WORK?

Although this option is not usually of much practical benefit, you can avoid losing your vehicle by paying off the debt in full. This would particularly make sense if your debt is relatively small or the vehicle is worth much more than the debt.

The 15-day notice mentioned above redemption must include

an itemization of the contract balance and of any delinquency, collection or repossession costs and fees and sets forth the computation or estimate of the amount of any credit for unearned finance charges or canceled insurance as of the date of the notice.

Calif. Civil Code 2983.2(a)(1)

Even if the loan payoff amount is relatively low, the added repossession, storage, and various other fees and other costs would add significantly to the redemption total. Since the vehicle was likely repossessed because you couldn't make the loan payments, you'd likely need some new source of money, and fast, to redeem your vehicle.

That's all the more true if you owe less than the vehicle is worth but still owe thousands of dollars. Again, the repo fees and other costs would add a lot to your debt. As frustrating as it would be to lose a vehicle under these circumstances, unless you have a deep-pocketed and very helpful relative or friend, or some other unusual source of money, the redemption option would not be much help to you.

HOW DOES CALIFORNIA VEHICLE LOAN REINSTATEMENT WORK?

Reinstatement of the loan tends to be a more practical option because it involves paying only your overdue payments and repossession charges, not the entire debt.

But unlike redemption it's a conditional right. You can reinstate your vehicle loan contract if your lender does not have reasonable grounds to believe that:

• you intentionally provided information that was false or misleading, and "of material importance," on your credit application;
• you, or anybody you give permission to, concealed your automobile or removed it from the state to avoid repossession;
• you, or anybody you give permission to, have or are threatening to vandalize or otherwise damage your vehicle, including "failed to take care of the motor vehicle in a reasonable manner";
• you "committed, attempted to commit, or threatened to commit criminal acts of violence or bodily harm" when the lender attempted to repossess your vehicle;
• you used your vehicle, or "knowingly permitted it to be used," to commit a criminal offense "other than an infraction" that resulted in the vehicle being seized; or

(Calif. Civil Code 2983.3(b))

Also, "[e]xercise of the right to reinstate the contract shall be limited to once in any 12-month period and twice during the term of the contract." (Calif. Civil Code 2983.3(c))

WHAT DOES IT TAKE TO CURE THE DEFAULT AND REINSTATE THE LOAN?

Assuming you have a right to reinstate the vehicle loan, you must cure any default as follows:

• "make the defaulted payments and pay any applicable delinquency charges"
• "obtain [any required] insurance or . . . reimburse the [lender] for premiums paid and all reasonable costs and expenses . . . incurred therefor"
• pay off "all encumbrances and liens or . . . reimburse the [lender] for all reasonable costs and expenses incurred therefor"
• "reimburse the [lender] for all reasonable and necessary collection and repossession costs and fees incurred, including attorney's fees and legal expenses expended in retaking and holding the vehicle"
• as for any other form of default, you must "cure the default" or "reimburse the [lender] for all reasonable costs and expenses incurred in connection therewith"

(Calif. Civil Code 2983.3(d))

So you have 15 days from the date of the lender's notice to cure any and all such defaults. This includes any defaults that happened both before and after the repossession. For example, if your vehicle was repossessed because you fell behind on payments, and then once it was repossessed you didn't pay your insurance, you'd have to catch up on both.

Plus you'd have to pay all the repossession and other costs before you could reinstate the loan and get back your vehicle.

WHAT COSTS AND FEES DO YOU HAVE TO PAY OVER & BEYOND CURING ANY DEFAULT?

As mentioned above, the statue states that your lender can require you to pay "all reasonable and necessary collection and repossession costs and fees incurred, including attorney's fees and legal expenses expended in retaking and holding the vehicle." Calif. Civil Code 2983.3(d)(5)

But in practice you will be charged "costs and fees" by three different entities: 1) your lender, 2) the local police or sheriff, and 3) the repossession agent.

1) The lender: All expenses that the lender pays to the repossession agent, its attorney, or anyone else must be reimbursed. This can easily amount to hundreds of dollars.

2) The local police or sheriff: The repossession agent has to notify the local police or sheriff's office within one hour about the repossession of the vehicle. Calif. Vehicle Code 28(a). To take your vehicle off this repo list "the debtor shall pay the sheriff [or police] a fee of fifteen dollars ($15) . . . before the vehicle may be redeemed by the debtor." Calif. Government Codes 26751 and 41612. The repossession agent is not legally allowed to release your vehicle "without first obtaining proof of payment of the fee."

3) The repossession agent: You will likely be charged a redemption or administrative charge, plus daily vehicle storage fees (about $20 to $40 per day). Also, to get back the personal property that was in your vehicle at the time of repossession you will likely have to pay a "removal processing" fee (about $50) plus a daily storage fee (about $10 per day, plus potentially more for "excessive quantities" or hazardous materials.

Again, these additional "fees and costs" are on top of whatever missed payments, contractual late fees, insurance and any other defaults you need to cure to bring you loan current.

WHAT IF YOU REALLY NEED YOUR REPOSSESSED CAR BACK AND CAN'T PAY TO REINSTATE THE LOAN?

Short answer: Get legal advice about your bankruptcy options.

Longer answer: Chapter 7 can buy you some time. Chapter 13 can usually buy you much more time, and may also reduce your monthly vehicle loan payments and overall amount to pay on the loan. Our next blog post will tell you all about your Chapter 7 and Chapter 13 options for rescuing your vehicle out of repossession.