Repossession Laws in Louisiana

Many people need to get an auto loan to purchase a car. When you finance a car with a lender, you sign a contract stating that if you don’t make your payments the lender can take the car back. This is because the car is securing the loan as collateral. If you don’t make your payments, the lender can take the car back in a process known as repossession. State laws dictate what lenders can and can’t do in a repossession. The state of Louisiana’s laws spell out the lender’s rights, as well as your rights as a consumer. 

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

Louisiana statutes state that you have to miss two consecutive payments on their due date before the lender can initiate repossession proceedings. If you make your payments more frequently than once a month, you’re considered to be in default once 60 days have passed since you last made a payment. It’s also helpful to read the contract you signed when you purchased the car. It will have more specific information about what happens when you default on your payments.

Will I Be Notified Before the Repossession? How?

Under Louisana state law, your lender (also called the secured party) must send a written notice to your last known address prior to repossessing your motor vehicle. This notice of repossession must contain:

• Your name, 

• Your last known address,

• A description of the collateral (car), and

• The statement: “Louisiana law permits repossession of motor vehicles upon default without further notice or judicial process.” 

Depending on the terms of your loan agreement, this may be the only type of notice you receive. The law doesn’t specify the number of days the lender must send the notice prior to the repossession. 

How Can I Prevent a Repossession?

You can prevent repossession in Louisana by:

• Filing bankruptcy: By filing either a Chapter 13 bankruptcy or a Chapter 7 bankruptcy you may be able to keep your car. 

• Speaking with your lender: When you speak with your lender and explain that you’re no longer able to make your car payments, you may be able to work out a new payment plan and keep your motor vehicle. 

• Purchasing wisely: When buying a car, don’t agree to a payment that is a stretch for your budget. Do your best to make a down payment, and try to find a low-interest rate loan. These steps will also help prevent you from becoming upside-down on your loan.

Should I Voluntarily Surrender My Car Instead of Letting It Be Repossessed?

If you’re unable to continue paying for your car, you can return it to the lender or dealership where you purchased it. This is called a voluntary surrender or voluntary repossession. Many lenders will ask you to sign a form that states you’re giving the car back when you do a voluntary repossession. You're not required to do this, but it can help you avoid paying the repossession fees. This will reduce the deficiency balance or the amount you have to pay after the lender sells your car.

What Can Repo Companies in Louisiana Do?

Louisiana repossession laws require repossession agents to get a license from the state of Louisiana’s Office of Financial Institutions. The repo company may only proceed with a repossession without going through a judicial process or getting a court order if they’re able to do so without a breach of the peace. This means that they can’t use force, threats, or intimidation while repossessing your car. While they can take your car from any public space, they can only take the vehicle from your property if they’re able to do so without breaching the peace. They can’t break locks or force through fences to retrieve the car. 

You’re also not allowed to commit a breach of the peace during the repo process.

What About the Personal Property in My Car?

If you’re worried that your car may be repossessed, take care not to leave any personal property in it. If you do, and your car is repossessed, you have 10 days to contact the repossessing creditor and demand the return of your property. The creditor is required to return your items immediately. If you don’t contact the creditor within 30 days, the property is considered abandoned, and the creditor is no longer responsible for it.

What Happens After a Repossession in Louisiana?

After an auto repossession in Louisiana, the creditor will likely sell the car in an auction. The proceeds from the sale are used to offset the amount you still owe on the loan. If your car sells for less than your car loan balance, you’ll probably have to pay the difference. This is known as the deficiency balance. For example, if the balance on your loan is $11,000 and the car sells for $8,000 at auction, you may be held responsible for the $3,000 deficiency. You can bid at the auction.

Do I Still Owe After a Repossession in Louisiana?

You may still owe money after your car repossession in Louisiana. The amount due under the terms of the loan agreement may include attorney’s fees, court costs, repossession costs, and late fees as well as the actual past-due amount. If the car is sold at auction and doesn’t make enough to cover the remaining balance, the lender will likely try to collect the deficiency balance from you. Voluntarily surrendering your vehicle will make these fees and costs more manageable, but it doesn’t erase your loan or what you owe on it.

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

If your car has been repossessed and you want to get it back, you may contact your creditor to ask what you can do to get the car back. In some instances, they will allow you to redeem your repossessed vehicle prior to when it is sold by paying them the balance of what you owe on the loan. If you’re able to reach an agreement with your creditor, make sure everything you agree on is put in writing. 

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

• LouisianaLawHelp.org provides information on auto repossession as well as resources for low-income Louisianans to get legal assistance.

• Southeast Louisiana Legal Services provides legal assistance to low-income individuals regarding civil matters, including consumer protection issues.

• The Louisiana State Bar Association has a list of Legal Services Programs and Resources in the state.

• The Federal Trade Commission has consumer information on dealing with late car payments due to COVID-19.