If you are like most Missourians, you need your vehicle to get to work, take the kids to school and buy groceries. But if you miss your car payments, you could lose access to your vehicle faster than you might think.
Whether your car has been repossessed or you are afraid it might be, it is important to learn more about these laws and your legal options. For help with your unique auto repossession case, reach out to A Bankruptcy Law Firm, LLC.
Missouri Is a Self-Help Repossession State
The first thing you need to know about auto repossession laws in Missouri is that the Show Me State allows what’s known as “self-help” repossession. Put simply, this means creditors can repossess your vehicle without going through state courts.
Of course, lenders have to follow certain rules about when a vehicle can be repossessed. But as you can imagine, allowing individual creditors to repossess vehicles without court approval opens up a lot of opportunities for wrongful repossessions or other violations of consumers’ rights.
When Can Your Car Be Repossessed in Missouri?
As much as lenders would like to be able to take your vehicle away the day after your first missed payment, Missouri law lays out a clear timeline for when your car can be repossessed.
First, your account must be at least 10 days overdue before the creditor can send you a notice saying that you have defaulted on the loan terms. Then, they have to give you 20 days after sending notice to catch up on your payments.
That amounts to a total of one month after you have missed a car payment before a lender can repossess your vehicle in Missouri. While this is the legal minimum amount of time allowed before repossession, many creditors will allow longer than 30 days. In many cases, it is in the creditor’s financial best interests if you keep the vehicle and continue making payments.
Auto Repossession Notices in Missouri
Before a lender can take your vehicle away from you, they have to send some legal notices required by Missouri’s auto repossession laws. These notices include the following:
- Notice of Default and Right to Cure
- Notice of Our Plan to Sell Property
- Notice of Sale and Possible Deficiency
We take a look at each of these notices in more detail below.
Notice of Default and Right to Cure
The Notice of Default and Right to Cure is the first legal notice a creditor can send you when your auto account is past due. They must wait 10 days after the missed payment to send this notice.
In the notice, you should see the following information:
- The lender’s name, phone number and address
- Information identifying the account in question
- Details about your right to “cure the default” (i.e., catch up on your payments)
- The amount due
- The date by which you must pay the default
- A note telling you that you could still owe money on the vehicle after it is repossessed and sold
After you receive the Notice of Default and Right to Cure, Missouri repossession laws give you 20 days to catch up on your auto payments. After that, the lender can repossess your car.
Notice of Our Plan to Sell Property
If 20 days came and went after the Notice of Default and Right to Cure and your car was repossessed, you still have a chance to get your car back.
Shortly after the repossession, the lender must send you a Notice of Our Plan to Sell Property. This is meant to give you a chance to pay to get your car back before the lender sells it.
But Missouri’s auto repossession laws make it difficult to get your vehicle back in this situation. That’s because you have only 10 days after receiving the Notice of Our Plan to Sell Property to pay the entire loan amount you owe for the car, as well as any additional fees you have incurred. Only then can you get your vehicle back after the lender has repossessed it.
Notice of Sale and Possible Deficiency
If you are unable to buy your car back from the lender after repossession, the lender will sell it to recover some of the amount owed. You might think the process is over at that point, but it likely isn’t. Unfortunately, Missouri law allows lenders to pursue the remaining amount you owe on the vehicle after they sell it by sending you a Notice of Sale and Possible Deficiency.
This notice describes the amount remaining on your account after subtracting what the lender sold your vehicle for. This amount is called a “deficiency.” If you refuse to pay the deficiency, the creditor may be able to sue you for the amount you owe, as well as their legal fees and the cost of any repossession company they worked with while dealing with your account.
The Notice of Sale and Possible Deficiency must detail how the lender landed on the amount they are now demanding from you. Missouri auto repossession laws also require lenders to use good practices to sell the car for a reasonable amount. In other words, they can’t sell your vehicle for pennies and then demand the rest of the money from you.
Dealing with Deficiency
When you have already lost your vehicle to repossession, it can feel unfair to then have to pay a deficiency. The good news is that you may have options other than simply paying the full amount of the deficiency.
The following are a few options to help you deal with a deficiency:
- Negotiate with the lender to arrange a payment plan.
- Negotiate a settlement amount for the deficiency that is less than the full amount you owe.
- If you simply cannot pay the deficiency amount, consider filing for bankruptcy.
Keep in mind that you may be able to fight the deficiency in court if the lender violated Missouri’s auto repossession laws at any point in this process. For example, if you did not receive all three of the required notices or the lender did not properly advertise your vehicle to get a good sale price, you may be able to legally challenge the deficiency amount.An experienced lawyer can help you explore your options for dealing with a deficiency.
Getting Your Personal Items After Vehicle Repossession
What if your vehicle was repossessed when you were at work or otherwise away from your vehicle? Anything you had inside the car is now with the lender or repossession company.
The good news is that you can get your personal items back. The lender might have a legal right to your car under auto repossession laws, but they do not have a right to your belongings inside the car.
Most repossession companies will notify you of the repossession and where and when you can get your personal items back. They might remove the items from the car and store them until you come and get them.
If the lender took your car or the repossession company will not provide information on how to retrieve your personal items, you can contact the lender and give them a list of all the items you need. Missouri law requires lenders to return your personal items.
It is important to note that items you installed inside or on the car, such as a new sound system or rims, are typically considered to be part of the vehicle — not your personal items.
How A Chapter 13 Bankruptcy Can Stop Car Repossession
Both Chapter 13 bankruptcy and Chapter 7 bankruptcy will enact the automatic stay when you file. An automatic stay will halt or prevent a car repossession as long as you file within 21 days of the vehicle being taken. This automatic stay gives you some time to save up some money while also temporarily keeping your vehicle.
A Chapter 13 bankruptcy will allow you to keep your car while paying off the loan at an interest rate that is generally more favorable with a longer term. This allows you to enjoy lower monthly payments to ease the financial burden of your car loan. If your car is over 910 days old and the value of the car is less than what you owe, you will only have to pay the value of the car and not the total balance of the auto loan. Often, this could save you thousands of dollars.
How A Chapter 7 Bankruptcy Can Help You Keep Your Car
A Chapter 7 bankruptcy could also help you keep your car if it’s been repossessed or is about to be repossessed. Chapter 7 bankruptcies won’t eliminate secured debt, so you won’t be able to get rid of your auto loan debt. However, the automatic stay will prevent you from losing your car immediately and give you some time to save up some money.
With the money you’re able to save up, you could sign a reaffirmation agreement to keep your car and continue paying the car loan after bankruptcy. If you have the money, you may be able to pay the lender a lump sum payment for the current value of the car (this process is called a redemption) to keep your car and eliminate the loan. This is very advantageous for individuals who owe more on the auto loan than their car is worth (underwater on the auto loan).
Eliminating Or Reducing Your Auto Loan Deficiency
In Missouri, the auto loan lender can sue you in court over a deficiency and obtain a deficiency judgement. If a deficiency judgment is obtained, the lender will be able to garnish your wages and place liens on other assets.
Fortunately, the deficiency balance is considered unsecured debt. A loan deficiency can be eliminated through a Chapter 7 bankruptcy and it can be reduced with a Chapter 13 bankruptcy. If your lender has already obtained a deficiency judgement and placed a lien on other property you own, your bankruptcy lawyer will have to file a bankruptcy motion to remove the lien.
Vehicle Repossessed in Missouri? Contact A Bankruptcy Law Firm, LLC
If your vehicle has been repossessed or you’re potentially facing repossession, the bankruptcy attorneys at A Bankruptcy Law Firm, LLC can examine your financials and help you determine the best course of action for saving your vehicle and reducing your debt. To discuss your case with a lawyer who is experienced with Missouri bankruptcy laws, reach out to the team at A Bankruptcy Law Firm, LLC. Call us at (800) 7-BENSON or contact us online.