What Repossession Fees Mean for You

How Much Does Repossession Cost?

Repossession can cost you hundreds—or even thousands—of dollars. These costs aren’t just for the missed loan payments. When a lender repossesses your car, you’re usually responsible for the fees they paid to take and store the vehicle, plus anything they spend to sell it. This can include towing fees, storage fees, auction costs, and sometimes legal or administrative charges.

These repossession fees vary depending on where you live and how your lender handles the process. Some states offer more protection to borrowers, while others give lenders more flexibility.

If your car is repossessed, you’ll need to pay these fees if you want to get the car back. Even if you don’t, you could still owe money after the lender sells the car. This is called a deficiency balance, and it can lead to further collection activity or even a lawsuit.

In the sections below, we’ll break down the typical repossession costs, how they’re calculated, and what your options are if you can’t afford to pay them.

What Fees Are Involved With Repossession?

Repossession a car can be very expensive because it often includesL:

• Towing fees

• Storage costs

• Public auction costs

• County or city fees

• Court cost and attorney fees

If your car gets repossessed you may owe those fees on top of other cost associated with your car loan, such as:

• The principal balance on the loan

• Unpaid interest on the payments

• Late fees that vary by contract

If your car is repossessed and sold at auction, you may be stuck with an additional cost called a deficiency balance. This happens when the sale price of the car is less than what you still owe on it. Lenders often sue to try to collect this balance.

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Can You Avoid Repossession Fees?

The only real way to avoid paying repossession fees is to stop the repossession from happening in the first place. Once your car is taken, you’ll likely be on the hook for towing, storage, and other costs, even if you don’t get the car back.

If you’re struggling to make payments, contact your lender as soon as possible. Many lenders are willing to work out a new payment plan to avoid the cost and hassle of repossession.

If keeping the car isn’t possible, you might consider selling it yourself to pay off the loan. A private sale often brings in more than a public auction and can help you avoid fees and damage to your credit. You could also consider voluntarily surrendering the car back to the lender.

Another option some people use to stop a repossession and eliminate repossession-related debt is filing for bankruptcy. Filing Chapter 7 or Chapter 13 bankruptcy may stop a repossession and wipe out any remaining balance if the car has already been taken.

Using Bankruptcy To Deal With Repossession & Repo Fees

If your car is at risk of being repossessed, or already has been, bankruptcy may help.

Both Chapter 7 and Chapter 13 bankruptcy can stop a repossession through something called the automatic stay. This court order immediately stops most collection efforts, including taking your car.

But how bankruptcy helps depends on which type you file and where you are in the repossession process.

Chapter 7 Bankruptcy and Repossession

Chapter 7 is faster and more affordable for many people. It can stop a repossession before it happens, and in some cases, it may wipe out any fees or remaining loan balance if the car was already taken and sold. But there are limits.

• If your car has already been repossessed before you file, Chapter 7 usually won’t help you get it back.

• If you want to keep your car, you may need to sign a reaffirmation agreement. This means you agree to keep making payments and remain responsible for the full amount you owe, including any fees and back payments.

• Chapter 7 doesn’t reduce your interest rate or loan balance. If your monthly payment is too high, that won’t change.

So before reaffirming your car loan, it’s important to be honest about whether you can realistically afford the payments after bankruptcy. Keeping a car you can’t afford can make it harder to get a true fresh start.

Chapter 13 Bankruptcy and Repossession

Chapter 13 works differently. It requires a 3–5 year repayment plan. This can help you catch up on car payments and repay what you owe through a court-approved plan.

• If your car was already repossessed, you may be able to get it back shortly after filing.

• You can often lower your interest rate and possibly reduce the total loan balance, especially if the car is worth less than what you owe.

• Chapter 13 can also help if you rolled negative equity from a trade-in into your current loan.

Chapter 13 is more complex and usually requires help from a bankruptcy attorney. But for people with steady income and car loans that are hard to manage, it can be a powerful tool to avoid repossession and reduce debt.

Let’s Summarize…

The repossession process is expensive, damages your credit score, and stays on your record for a long time. It’s possible to avoid high repossession fees by negotiating with your lender for more favorable terms. 

If repossession is the least of your financial woes, consider filing for bankruptcy. It not only stops repossession (at least temporarily) but is a powerful debt-management tool. If you don’t qualify for Upsolve’s free software to file Chapter 7 yourself, can also work with a local lawyer to figure out what options are available when facing car repossession.