Limitations On Vehicle Repossessions In Las Vegas, Nevada

If you own your home but fall behind on mortgage payments, you will receive several legal notifications from your lender before they can proceed with a home foreclosure. Most of the time, people who have auto loans are not afforded this same time to repay and prepare when they fall behind. Based on the terms of the contract, the auto lender may be able to repossess a vehicle when the borrower is late on just one payment. Immediate repossession may not be the most financially beneficial for the lender, as they can let late fees and other charges add up before taking back the vehicle and selling it at auction. If you are a Las Vegas or Reno resident that believes that a vehicle repossession is in your future, bankruptcy might be able to help. Let our experienced lawyers review your situation to see if bankruptcy is the right form of debt relief for you. To schedule your free consultation today, call 702-842-0700. 

What Happens When a Vehicle Is Repossessed?

When someone purchases a vehicle without paying it off in full, they will need to make monthly payments to their lender. Auto lenders have more leniency in pursuing unpaid debt than home mortgage lenders. They can repossess a vehicle for almost any violation of the contract, including making a late payment or missing a payment for the month. The lender will send the “repo man” to the borrower’s residence to retrieve the vehicle. If the borrower doesn’t cooperate in surrendering the vehicle, repo men are known for going to great lengths to complete a repossession. 

If the repo man can retrieve the vehicle before the borrower takes action, the borrower can be charged additional fees on top of what they already owe. This can include repossession fees, late fees, legal fees, and more. The borrower will have an opportunity to save their vehicle through redemption, or paying off the full balance before the lender can proceed with a repossession auction. Each state has its own rules on how much time the lender must give the borrower to redeem their vehicle before the sale. If the vehicle sells at auction for less than the borrower owes, this creates a repossession deficiency. This is an unsecured debt, but the lender can still pursue the borrower for repayment through a judgment, garnishment, etc. If you are looking to save your vehicle from repossession through bankruptcy in the Las Vegas or Reno area, contact our firm for your free consultation at 702-842-0700. 

Rules For a Lender’s Conduct During Repossession

Just because a lender has the right to repossess a borrower’s vehicle doesn’t mean there are no rules and restrictions surrounding it. A creditor has certain responsibilities towards borrowers, even if their vehicles are repossessed. Four major requirements of a lender proceeding with repossession are to avoid breaching the peace, provide the borrower with notice of the sale, conduct the sale in a commercially reasonable time, and return any excess proceeds to the borrower. 

No Breaching The Peace

Repo men can be aggressive, but they aren’t allowed to commit trespass and otherwise breach the peace to execute a vehicle repossession. They cannot enter a borrower’s home or garage without their permission to gain access to their vehicle. The repo man can’t threaten or attack a borrower, nor can they destroy the borrower’s property to force them to surrender the vehicle. If a borrower is sitting in their vehicle to prevent a repossession, the repo man cannot pull the borrower out of their vehicle or otherwise physically remove them to facilitate the repossession. These acts are crimes of their own when the context of a vehicle repossession is removed, so a creditor cannot engage in them as a part of debt collection.

Notice Of Sale

A creditor can sell a repossessed vehicle through a public or private sale. The borrower should be notified of the date of either type of sale. This lets the borrower know how long they have if they wish to redeem their vehicle. The notification should include information about the borrower’s rights as they pertain to the sale, their potential deficiency balance, and contact information if the borrower wishes to participate in redemption. In Nevada, the borrower must be provided with at least 10 days’ notice. The notice can be provided in person or by mail. 

Commercially Reasonable Sale Time

Nevada law requires that repossession sales must occur in a commercially reasonable manner. This law proactively shoots down the potential argument from a debtor that they could have obtained a higher sale price by conducting the sale at another time or through another method. The lender is instead required to sell the vehicle “in the usual manner in any recognized market for such a vehicle” or if the sale is in conformity with “reasonable commercial practices among dealers in the type of vehicle sold”. If the sale was approved by any judicial proceeding, it will be presumed to be commercially reasonable. 

Return Of Surplus

An auto lender is allowed to inflate the balance on the loan for a repossessed vehicle through late fees, legal costs, repossession expenses, and more. This often means that the borrower will still owe a deficiency after the repossession. But if the vehicle sells for more than the loan’s balance, this is known as a surplus, which should be returned to the borrower.

Bankruptcy & 722 Redemptions

Bankruptcy offers a helpful option for debtors whose vehicles have been repossessed. Based on 11 U.S.C. § 722, a debtor can redeem tangible personal property from a lien. This is referred to as a “722 Redemption.” A bankruptcy debtor who utilizes the 722 redemption option will need to pay their lender a lump sum payment for the vehicle’s market value. For example, if the debtor’s loan has a balance of $25,000, but the vehicle’s market value is only $17,000, the debtor can redeem their vehicle with a payment of $17,000. It may not seem plausible for someone whose vehicle has been repossessed to have cash on hand to pay off their vehicle’s loan/market value in full. However, there are lenders available who specialize in 722 redemptions and will provide debtors with affordable loan options to save their vehicles from repossession. If you have more questions about the 722 redemption process in Las Vegas and Reno, call 702-842-0700 for your free consultation with our firm. 

Fight Back Against a Las Vegas Or Reno Vehicle Repossession With Bankruptcy

Bankruptcy’s automatic stay provides a broad range of protection for a debtor who files a bankruptcy petition with the court. It can stop a vehicle repossession that has not yet occurred, and it offers an opportunity to reverse a repossession that hasn’t proceeded to the sale phase. But when important assets such as your vehicle are at stake, it’s important that every detail in your petition is precise and in compliance with bankruptcy law. At Zero Down Bankruptcy Lawyers of Nevada, we provide skilled bankruptcy representation for Nevada residents with affordable payment plan options starting as low as Zero Dollars Down. To schedule your free phone consultation, call 702-842-0700 or contact us. 

Zero Down Bankruptcy Lawyers
Phone: (702) 842-0700
Email: info@vegaszerodownbankruptcy.com

Las Vegas Office
5552 Ashley Creek St
Las Vegas, NV 89135

North Las Vegas Office
7251 W Lake Mead Blvd
Las Vegas, NV 89128

Henderson
1489 W Warm Springs Rd #110
Henderson, NV 89014