Repossession Laws in Pennsylvania

For many people, it only takes one financial setback to throw off their whole budget. If you lose your job or have an unexpected medical emergency, you may get behind on your car loan payments. If this happens, you're at risk of repossession. This is when your lender takes your car and sells it to try to recoup its losses. The lender has a legal right to do this because it has a security interest in the car, which serves as collateral. 

If your car goes missing in Pennsylvania, you won't have to wait long to figure out what happened. You'll get a notice from your lender by the next day. 

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

Under Pennsylvania law, lenders can repossess a borrower’s car if they default on the loan. Though this could mean letting your insurance lapse, most repos happen because borrowers get behind on their car payments. Your loan agreement will outline exactly what default means to your lender. If the loan contract says paying one day late is a default, that's enough for a Pennsylvania repossession. 

Will I Be Notified Before the Repossession? How?

You don't have to be notified before a car repossession under Pennsylvania's Motor Vehicle Sales Finance Act. You do have to be notified immediately after the auto repossession though. The lender must personally deliver a written notice or send one by certified mail. In most cases, you'll get the certified mail the next day.  

How Can I Prevent a Repossession?

If you’re struggling financially and know you won’t be able to make your full car loan payment, contact your lender rights way. They may have solutions that can help you through your hardship. You may be able to get a forbearance and temporarily pause your payment. Or the lender may be willing to negotiate better loan terms. 

If your lender isn’t willing to work with you, consider refinancing your loan with another lender. Everyone suffers from financial hardship at times. You need to make sure you have a lender that will work with you.

What Can Repo Companies in Pennsylvania Do?

In Pennsylvania, a lender or repossession company can repossess your car from public or private property, like your driveway or a grocery store parking lot. But they can't breach the peace. This means they can’t try to take your car from your garage or from a fenced-in yard with a locked gate.

Also, if you catch the repo agent in the act you can tell them to stop. If they don't, they’ve breached the peace. They may repossess your car anyway, but you shouldn’t use force to stop them because then you'll be breaching the peace. Not only could you get hurt, but you could be charged for committing a crime.

In Pennsylvania, a repossession company has to be licensed as a collector-repossessor with the Department of Banking and Securities of the Commonwealth. If the repo company breaches the peace, you can file a complaint with this department. Such a complaint might result in the repo company getting its license revoked. Note that this license is only required for repo companies.

What About the Personal Property in My Car?

In Pennsylvania, you have any personal property that was in the vehicle when it was repossessed returned to you. You have 30 days from the date of the notice of repossession to recover your property. After 30 days, the company that repossessed the car may dispose of your property however it wishes.

If you know your car is at risk of repossession, it’s good to remove any personal property from the car, so you don’t have to deal with working against this deadline to get it back.

If you have trouble getting your personal property back from the repossession agent, call the lender. If you still can't get the property back, get legal advice quickly. You only have 30 days, and you may need to file a lawsuit to get your things back.

What Happens After a Repossession in Pennsylvania?

After the lender repossesses your car, it will send you a notice the next day. In Pennsylvania, lenders are required to include certain information in the repossession notice to comply with the Motor Vehicle Sales Finance Act. This includes:

• That you have a right to reinstate the loan and redeem (get back) your car if the lender allows it.

• An itemized statement showing how much you need to pay to redeem the vehicle or reinstate the loan.

• Notification that the seller intends to sell your vehicle at least 15 days after the date of the notice.

• Information about where the vehicle is stored.

• The name and address of the person the buyer needs to make payment to or needs to serve any documents on.

• A statement that your personal items will be held for 30 days from the date of the notice.

• The name and address of the person you need to contact to get a full accounting of the money you owe.

Under Pennsylvania’s version of the Uniform Commercial Code, that same notice should also contain the following information:

• The name of the debtor and the lender

• A description of the collateral (in this case, the repossessed car)

• How the lender intends to sell the repossessed car (public auction or private sale)

• The time and place of the public auction or the time when a private sale may first occur

• An explanation that the borrower may have to pay a deficiency if the proceeds from the sale of the vehicle aren’t enough to cover the loan balance plus the costs of repossession

• A phone number for a person that can tell the borrower what they must do to redeem the vehicle

• A phone number or address for information about the sale or the amount owed

It's important to consult with a Pennsylvania attorney if your notice doesn't contain all the required items. You may be able to file a claim against the lender if the lender sells the vehicle and hasn’t given the proper notice requirements.

Every aspect of the vehicle’s sale must be commercially reasonable. This means the sale must be fair and sold with commonly accepted commercial practices. For example, selling the car at an auto auction that was advertised over at least the last week would be commercially reasonable. Selling the car to the lender’s brother for $1 wouldn’t be commercially reasonable.

When a sale doesn't bring in enough money to pay the balance of the loan plus the costs of repossession, you have to pay the difference. This is called a deficiency balance. You’re more likely to end up with a deficiency balance if you’re already upside-down on your loan, which means you owe more than the vehicle is worth. If the sale proceeds are more than what you owe plus the cost of a repossession, the lender owes you the surplus.

Do I Still Owe After a Repossession in Pennsylvania?

If your car doesn’t sell for the amount you owe on the loan plus the lender's repossession costs, you’ll owe a deficiency balance. If the lender takes you to court to collect on the deficiency balance by getting a court order called a deficiency judgment, you can raise defenses. One defense may be that the sale price wasn’t reasonable or the sale wasn’t conducted fairly. The judge will decide. 

If the judge determines the sale price wasn't reasonable, your deficiency balance or surplus will be determined based on what the judge decides is the reasonable value of the vehicle instead of the sale price. If the lender doesn't sue you, you can sue the lender to have the judge decide the value of the vehicle and determine if you have a lower deficiency balance or a surplus.

The costs of the repossession of a vehicle are part of the calculation of any deficiency balance. If you voluntarily surrender the vehicle, you won't be liable for these costs.

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

If the lender agrees, you can reinstate the car loan before the vehicle is sold, if you:

• Catch up on all the payments you're behind on,

• Come to an agreement with the lender about late fees, and

• Come to an agreement with the lender about the costs of repossession and the costs of collection including any attorney's fees and court costs.

You also have the right to redeem the vehicle. This is different from reinstating the loan. To redeem the vehicle, you’ll need to pay the following within 15 days of getting the repossession notice:

• The remainder of the amount due on the loan,

• All late charges that are allowed by law, and

• Any other amount the lender is able to collect under the terms of your loan contract.

If you redeem the vehicle after 15 days from the repossession notice, you'll have to pay the same amount you would have had to pay before 15 days plus, you'll have to pay the costs of repossessing, repairing, and storing the vehicle.

You may also be able to get your car back or avoid repossession by filing for bankruptcy. A Pennsylvania attorney can look at your case and help you understand if this is a good option for you. If you can get your car back through a Chapter 13 bankruptcy, you'll be able to make some changes to the terms of your loan contract that will make your monthly loan payments easier to afford. 

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

• Repossessions Information From PALawHELP.org

• Pennsylvania Self-Help Legal Information

• Free Legal Answers for Pennsylvanians from the American Bar Association

• Pennsylvania Legal Aid Network Providers in PA

• Pro Bono Services from the Pennsylvania Bar Association