Repossession Laws in Delaware

A car loan is a secured debt. This means that if you don’t make your loan payments, your lender can take your car back. Taking the vehicle back is called repossession. Having your car repossessed can leave you feeling stranded and helpless, especially if you’re among the nearly 80% of Delaware residents who rely on their cars to get to work or school. 

This guide explains how repossession works in the First State, your rights and options if your car is repossessed, and what you can do to prevent a repossession.

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

In Delaware, your lender can repossess your vehicle as soon as you default on your loan. But Delaware law doesn’t define default for auto loans — your security agreement or auto loan contract does. The definition varies from one creditor to another, but default typically includes:

• Missing a payment,

• Making a late or partial payment,

• Not maintaining enough car insurance, or 

• Violating some other term of your contract. 

Will I Be Notified Before the Repossession? How?

Delaware repossession law doesn’t require your lender to give you any warning before repossessing your vehicle. If your loan agreement says you’re entitled to advance notice, though, then your lender must comply. Sometimes, your lender might voluntarily warn you before a repossession. Most lenders would rather work out a payment arrangement than repossess your vehicle.

How Can I Prevent a Repossession?

In some cases, you can avoid repossession by communicating with your lender. Let them know as soon as possible if you won’t be able to make a payment. If you’re already behind on payments, contact your lender to see what you can do to catch up on the loan and prevent repossession. 

Bringing your loan current before your car is repossessed is nearly always cheaper and easier than trying to get it back after a repossession. In Delaware, borrowers don’t have the right to cure a default after a car repossession. In other words, after your vehicle has been repossessed, just catching up on all the missed payments won’t be enough to get the car back.

What Can Repo Companies in Delaware Do? 

In Delaware, a repossession company can repossess your car anywhere and at any time as long as they don’t breach the peace during the repossession. What counts as breaching the peace is determined by Delaware courts on a case-by-case basis. Using violence, threats, or abusive language, or making excessive noise are common examples of breaching the peace. You’re also not allowed to breach the peace to stop a car repossession under Delaware law.

Using force is typically also considered breaching the peace under Delaware law. A repo agent can’t use force to access your vehicle, which means they can’t cut a lock or break into a locked or enclosed area, such as a gated yard or locked garage. But they can enter a private driveway. They can also enter an open or unlocked garage or fenced area if they can do it without using force. 

Delaware law doesn’t require repo companies to show you any documents or licenses before repossessing your car. If the repo agent doesn’t provide you with any information, contact your lender right away to confirm that they authorized the repossession. If in doubt, contact your local law enforcement.

What About the Personal Property in My Car? 

Delaware law protects your rights to any personal belongings that are in your car when it’s repossessed. You’re entitled to get these items back, but you’ll likely have to meet with a repossession agent and pay a storage or processing fee. Some repo companies waive the storage fee for your belongings if you turn over one or more sets of your vehicle’s keys. Any property that’s attached to the vehicle, such as a sound system or tires, stays with the vehicle. You must claim and pick up your personal items before your lender sells your car. 

If you’re behind on your car payments or think your vehicle is at risk of repossession, clean all your personal property out of the car now. That way, you won’t have to deal with getting your belongings back if your car is repossessed. 

What Happens After a Repossession in Delaware? 

After a repossession, your lender can sell your car at a public auction or private sale. If you financed your car directly through a dealership, rather than a third-party lender, the dealership may choose to keep your car and resell it. Your lender must decide what they’re going to do with your car and send you a written notice of intent within a reasonable time after the repossession. It’s up to a judge to decide what’s reasonable. Generally, your lender can’t wait so long that your car loses value, and they can’t act so quickly that you don’t get the required notice.

If your lender is going to sell your car at a public auction, the notice must include:

• The date, time, and place for the auction, and 

• A phone number you can call for more information about the sale. 

You’re entitled to at least 15 days’ notice before the sale. You’re allowed to go to the auction, bid on your car, and even buy the car back at the auction. 

If your lender is going to keep or lease your car or sell it through a private sale, they don’t have to provide a sale date. But they must provide a cutoff date that is at least 15 days away. They can’t sell the car until after this date.

Your lender must make an effort to get a good price for your car. This doesn’t have to be the market value. Delaware courts have ruled that 50% of the market value is still considered a fair price if the lender makes a reasonable effort. 

Whatever amount your lender receives for your car will be applied to your loan debt. The more money your car sells for, the more of your debt will be paid off. If there’s not enough money from the sale to pay everything you owe, the remaining balance is called a deficiency balance.

Do I Still Owe After a Repossession in Delaware? 

Before a lender applies car sale proceeds to your car loan debt, they add all the repo and sale expenses to the amount of the loan. Examples of these costs include:

• Expenses for cleaning and storage

• Auction and advertising costs

• Administrative and document charges

• Legal fees

These charges can substantially increase the amount you owe. Under Delaware law, your lender must pay the sale and repo costs first before paying your loan balance. Not surprisingly, in many repossessions, the car’s sale price isn’t high enough to cover everything. If a deficiency balance remains on your loan, you’re still responsible for paying it. Your lender can sue you to collect this balance. 

If you owe more than your car is worth, you’ll likely owe a large deficiency balance. One way to reduce your deficiency amount is to voluntarily turn your car over to your lender. You’ll still owe the deficiency, but you won’t have any repo fees added to your balance.

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

In Delaware, you have the right to get your repossessed vehicle back by redeeming your loan. To redeem your loan, you must pay the entire loan debt, not just the past-due portion. Your loan debt may include interest, late fees, and any repo-related charges. You can redeem your loan at any time before your car is sold at auction or before the cutoff date in the written notice of intent from your lender. 

In their written notice of intent, your lender must provide a phone number you can call to find out the exact amount you must pay to redeem your car. Your lender must give you a statement showing how they calculated this amount if you request one.

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

• Legal Services Corporation of Delaware’s Vehicle Repossession Guide.

• Delaware Department of Justice Consumer Protection Unit.

• Repossession information from Delaware Legal Help Link.

• Delaware State Bar Association has a list of resources and information on free legal aid for low-income individuals.