Bankruptcy can stop car repossession in Mississippi

Car Repossession in Mississippi

Repossession is when a creditor takes property from you because the payments are not being made.  While many things can be repossessed for non-payment, we commonly hear about it being done with large and easy to get to collateral such as cars and trucks.  If you get behind on your car note you might get a visit from the local repo man.

Car Repossession Mississippi

How many car payments can I miss before repossession?

I am frequently asked how many months you have to be behind on payments before the lender can repossess a car.  Unless your contract provides a grace period for late payments, an auto lender can repossess a vehicle as soon as the loan is behind.  As a practical matter, however, most lenders will wait at least a couple of months before they repossess a vehicle.

Procedure for car repossession

Like most other states, Mississippi’s car repossession laws allow self help repossession.  What this means is that once you fall behind on the payment of your car debt, the lender can come get the vehicle at any time without having to go through the court system. 

The Mississippi Supreme Court has let us know that “self-help repossession is permissible so long as it can be accomplished without a breach of the peace.” What does that mean? Although this term is subject to legal interpretation, a breach of the peace is most commonly found when the repossession leads to some sort of physical violence either by the debtor or the secured party.  A repo-man can’t do things like pull you out of the car or physically knock you out of the way without breaching the peace.  Destruction of property, such as breaking out a car window to get inside or breaking a garage door open to get at the car, are also types of actions that breach the peace.  In other words, self-help repossession is typically permitted unless it results in some violence or harm to person or property.  It has to be peaceful.

A repossession that breaches the peace can give rise to a legal cause of action that leaves the repo-man and creditor who hired them potentially liable to you for damages. This is why repo-men like to pick up your car while you are busy at work or asleep in the middle of the night.  Under these conditions, there is less chance that the repossession will end up in a confrontation between you and them.  This means there will be less chance of a breach of the peace and a better chance at a successful repossession.

What happens after repossession in Mississippi?

Once a vehicle is repossessed, it is typically sold and the money received is applied to the car debt.  If the sales price is less than the debt owed, the lender can come after you for the remaining balance.  This balance is called a deficiency.  To collect a deficiency balance the creditor can file a lawsuit against you.  If the suit is not answered and defended it will result in a default judgment.  In this scenario the car owner is typically also stuck with having to pay the creditor’s attorney fees and other costs of the lawsuit.

Once a judgment is entered by the court it acts as a lien against all your property in the county, including your house.  Having a judgment also allows a creditor to garnish wages and bank accounts.

So your car has been repossessed, now what?

If the vehicle has already been repoed, time is short. Once the vehicle is sold, it will be next to impossible to get it back.

The most obvious way to stop the sales process is by catching up on the loan payments.  If you are not in a position to catch up on the payments, bankruptcy can provide a way to get the vehicle back and catch up on these payments over time.  Under the right circumstances, a Chapter 13 bankruptcy can be used to reduce the loan amount and the interest rate, thus reducing the total amount you will have to pay to keep the vehicle.

Even if you no longer want the vehicle, bankruptcy is a tool that can be used to protect against any deficiency that is owed if the car is sold for less than the loan.  Remember that if the sale doesn’t pay the balance of the loan, you still owe it even though you no longer have the vehicle.

Repossession laws can be complex and can work quickly against you.  If you are worried about possible repossession or are dealing with a vehicle that has already been repossessed, it is important to contact an attorney to discuss how Mississippi law may apply to the specific facts of your situation.  To schedule an initial free and confidential consultation to discuss your particular situation call 601-853-9966.