Repossession Laws in Alaska

Many people need to get a car loan to buy a vehicle. When you buy a car using a loan, the lender has a security interest in the car. This allows them to take the vehicle back through a process called repossession if you default on the loan. You can default by missing payments or not following the requirements of the loan contract, like carrying the proper insurance.

State law determines how creditors are allowed to repossess motor vehicles as well as what your rights as a borrower are. This article is about vehicle repossessions and related consumer protections found in the state of Alaska’s Uniform Commercial Code (UCC).

How Many Payments Can I Miss Without Risking a Repossession in Alaska?

State car repo laws permit a creditor to repossess a motor vehicle at any point after the borrower defaults on the loan. A default can result from one or more missed payments, or it can happen when a borrower violates other terms of the loan agreement. Car loan contracts typically have a grace period that prevents you from going into immediate default if you don’t pay on or by the due date. A grace period provides a few days to pay after the payment due date without penalty. You can check your loan contract to see if you have a grace period and when your lender considers your loan to be in default.

Will I Be Notified Before the Repossession? How?

Unless your loan documents say otherwise, the creditor doesn’t have to notify you before taking your vehicle after you default on the loan. Vehicle repossessions can take place without a court order as long as the repo agent doesn’t cause a breach of the peace. It isn’t unusual for a repo towing company to repossess in the middle of the night to avoid breaching the peace. 

How Can I Prevent a Repossession?

If it’s possible, the best way to stop a vehicle repossession is by catching up on your loan payments. You can either call the creditor or review your loan contract or creditor notices to find out how long you have to catch up before you run the risk of losing your car. If you need to make a late payment, it’s best to do it over the phone with your loan servicer. If you send it in the mail it can get delayed, and some online payment systems make it difficult to pay past your due date or grace period.

If you’re temporarily unable to make timely car payments, call your loan servicer to see if there’s anything you can do to avoid going into default status. Depending on your circumstances, you may qualify for a temporary forbearance or be able to get on a payment plan to catch up. Your lender may even offer to permanently change your monthly payment amount or due date.

What Can Repo Companies in Alaska Do? 

Car repossession laws permit a repo company to take your car off the street or right out of your driveway. But repo agents can’t breach the peace when they take a vehicle, which means they can’t use violence, threats of violence, or force. If you’re there while the repossession is happening, you can ask the agent to stop and leave your property. If the agent continues anyway, this could later be considered a breach of the peace by a court. 

You shouldn’t block the agent or use physical force against them, even if you believe your car is being wrongfully repossessed. That’s because doing so could result in violence and/or criminal charges against you.

State law requires repossession companies to be licensed as collection agencies. Alaska has an online system to look up repossession companies to confirm they are properly licensed.

What About the Personal Property in My Car? 

A creditor can’t keep or sell the personal belongings you left inside your repossessed car. You can call either your lender or the repo company to arrange to retrieve those items. If you know you’re at risk of losing your car, remove your personal items from the vehicle so you don't have to deal with getting them back later. Be especially sure to remove any important papers from your car.

What Happens After a Repossession in Alaska?

After the lender repossesses your car, they are allowed to sell it to recoup the money you owe. The lender must send you a notice after the repossession telling you when and how your car will be sold. Unfortunately, the law doesn’t specify how long your lender has to do this— only that it must happen within a “reasonable time.” The notice will tell you the time and place of a public auction or the time after which a private sale will occur. If a public auction is scheduled, you’ll be able to bid on your own car. The notice should also provide information about your liability for any deficiency balance and phone numbers to inquire about how to redeem the car (get it back) and get more information.

Creditors are required to sell repossessed vehicles in a commercially reasonable manner. This means they have to sell them the same way they sell other vehicles, and they must try to get a fair market price. Once the car is sold, the lender will apply the sale proceeds in a certain way. The money is applied first to the lender’s costs, which include the costs of repossession, towing, etc. Assuming there is money remaining, it’s applied to the balance of the loan, then to any subordinate lienholders, and finally to any co-signers on the loan. 

You’ll get a written explanation showing whether you’re owed a surplus or whether you need to pay a deficiency. A surplus means that the proceeds from the sale of the car were more than the balance you owed on the loan plus all the costs of repossession. 

More commonly, there’s a deficiency balance. That means the proceeds from the sale weren’t enough to cover the loan balance and the repossession costs. This is likely to happen if you’re upside-down on your car loan, meaning you already owed more on the loan than the car is worth. You’re responsible for paying this deficiency. If you don’t pay it, the lender will probably sue you.

Do I Still Owe After a Repossession in Alaska? 

You may still owe the creditor money after your car is sold. The lender or creditor will add its costs plus any fees you owe under your loan contract to the total amount due on the loan. The sale of the vehicle will reduce this liability, but you’ll still owe the deficiency if the sale price is less than the total you owed. If you voluntarily return your car to the lender, you might be able to reduce your deficiency balance somewhat by avoiding the lender’s costs of retaking the vehicle.

Can I Get My Car Back After a Repossession in Alaska?

A borrower can redeem a repossessed car at any point before the lender has sold the car or entered into a contract to sell it. Redeeming the car means getting it back. To get it back, the lender may require you to pay the loan off in full and to pay any late fees, the lender’s costs, and attorney’s fees. You can find more information about how to redeem your car in the notice that the lender sends prior to selling the vehicle at auction.

Where Can I Find More Information About Repossession Laws in Alaska? 

• Alaska Legal Services Corporation has a helpful FAQ on Vehicle Repossession. 

• You can use Alaska Free Legal Answers if you have legal questions about a repossession.

• The Alaska Division of Motor Vehicles has useful information on repossessions.

• You can search for a repossession company’s license using the Alaska Online License Search for Repossession Companies.