Repossession Laws in Rhode Island

According to the Rhode Island Department of Transportation, over 80% of workers in the Ocean State rely on their cars to get to work. If you’re among this majority and you’re late making your car payment, you risk having your car repossessed. A car repossession happens when a lender takes back a car because a borrower is behind on payments. Having your car repossessed is stressful, but you can take action to get your car back. This article explains how the repossession process works in the state of Rhode Island and what your rights are.

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

In Rhode Island, your car can be repossessed even if you miss just one car payment. But your payment must be 10 days late before the creditor can begin the repossession process. During these 10 days, the creditor must allow you to pay the past-due amount you owe.

Will I Be Notified Before the Repossession? How?

You’ll be notified of the repossession if your car is repossessed in Rhode Island and you haven’t defaulted on your car loan agreement in the previous 12 months. This is required by Rhode Island General Laws. The notice you’ll receive is called a notice of the right to cure the default. It lists your rights, the amount you owe, and the name of the creditor. If you defaulted on your car loan agreement within the last year and then you default again, you may not receive notice. 

You’ll have 21 days from the date the notice was delivered to make the past-due payment. If you do, the lender must reinstate the loan. Loan reinstatement is when your loan is brought back into good standing. The date of delivery is the actual delivery date, such as the date a return receipt was signed, or the date that is three days after the notice was mailed. The notice will be mailed to the last known address you had on file with the creditor.

Laws concerning repossession notices are covered under the Rhode Island Automobile Repossession Act, which is in Title 6 of Rhode Island Commercial Law.

How Can I Prevent a Repossession?

You can prevent a repossession in Rhode Island by paying the past-due amount within 21 days of receiving your right to cure notice. After you pay the full past-due amount your loan will no longer be in default status. If you think you’re going to be late with a car payment, consider contacting your lender to make payment arrangements before you default. The lender might prefer to change your due date rather than pay an attorney to process a legal notice. If you have a more serious setback, consider asking your lender to refinance your loan.

Depending on your car’s value, you could sell your car and use the money to pay off the loan. You could also talk to the lender about a voluntary surrender, which will save you from having to pay repossession costs. Voluntarily surrendering your car also means it won’t be towed without warning. You could also consider filing bankruptcy, which will put a temporary stop to collection activity, including repossession.

What Can Repo Companies in Rhode Island Do? 

A repossession company can legally repossess your car without getting an order from the court. This is called a self-help repo. This means a repo company in Rhode Island can repossess a motor vehicle on a public street while you’re at work or even from your driveway at home. Generally, the courts have held that a repo company can repossess a motor vehicle from a public area or your private property so long as they don’t break a lock or forcibly enter a closed area like a garage. If they do, that’s considered a breach of the peace.

Violent or disorderly behavior during a repossession is also considered breaching the peace. And that’s true for both the repo agent and for you. If you threaten violence or act disorderly to avoid getting your car repossessed, you could be charged with disorderly conduct and be subject to a prison sentence of six months. Judges and juries are the ones that decide what’s considered a breach of the peace. But in the past, the Rhode Island Court has considered disorderly conduct a breach of peace.

Note that repossession agents in Rhode Island don’t need a special license, and the law doesn’t specifically require them to identify themselves. But repo agents must report repossessed vehicles to the local police within an hour (or to the state police if the local police can’t be contacted). If your car suddenly goes missing, be sure to verify it with a police report.

If you’re a military service member, you have some added protection. If you made at least one payment before entering the military and you’re currently serving, a lender must get a court order and cannot use the self-help repo option. This law is under the Servicemembers Civil Relief Act (SCRA).

What About the Personal Property in My Car?

If you’ve missed a car payment, don’t keep valuables or personal items you need in your car. It’s easier to clear out your car before it’s repossessed. If your car is repossessed with your belongings in it you can still get your belongings back. Contact your lender and arrange a time to pick up your things. Your lender can’t keep your personal belongings and the repo man can’t keep your personal belongings. 

What Happens After a Repossession in Rhode Island?

After your car is repossessed, the lender can sell your car at a public auction to the highest bidder at fair market value. The lender will use the sale proceeds to cover the loan balance, plus late fees and penalties as well as repossession costs. You can buy your car, but you’ll be paying a lot more. 

Rhode Island lenders must give you notice before they sell your repossessed car. This is required under Rhode Island’s Uniform Commercial Code. The notice will contain the following information:

• How the lender intends to sell the car (usually at an auction).

• The date, time, and place of the auction or sale and a statement letting you know you can bid on the car or have other bids for you.

• A statement letting you know that you are responsible for any deficiency balance.

• Contact information for your lender. 

If the car sells for less than what you owe on the loan (plus other fees and the repo cost), you’ll owe a deficiency balance even though you don’t have your car. The deficiency balance is the amount you still owe on the debt after the car is sold. 

Do I Still Owe After a Repossession in Rhode Island? 

Unless your car was sold at a high enough price to cover the entire amount of your loan plus fees, costs, and expenses, you’ll still owe money after repossession in Rhode Island. Just because the car is gone doesn’t mean the loan is gone.

The deficiency balance is the amount of the loan that you have left to pay. This includes the cost of the repossession and the cost of the auction. It also includes late fees, penalties, other costs such as insurance, and any attorney fees or filing fees the lender incurred.

You can avoid hundreds of dollars in extra fees by voluntarily surrendering your car to the lender before repossession. A voluntary repossession allows you to control when you give up your car and to avoid paying all of the extra fees, costs, and expenses from the repossession. The deficiency balance may be more manageable, and you might be able to pay it off and clear up your credit.

Can I Get My Car Back After a Repossession in Rhode Island?

 In Rhode Island, you’ll have at least 20 days from the date of repossession to get your car back before it goes to auction. This is called a redemption period. You can call your lender and tell them you want to redeem your car. You must pay the past amount due, plus the late fees, costs, and repossession expenses to redeem your car.

After 20 days, the lender can sell your vehicle at fair market value. Under Rhode Island law you can pay the past-due amount (plus costs and expenses) until the lender either sells the vehicle, disposes of the vehicle, or receives the right to keep the vehicle.

Where Can I Find More Information About Repossession Laws in Rhode Island?

Here is a list of useful links on car repossession in Rhode Island:

• Rhode Island Legal Services – Contact information for legal aid assistance and legal advice for low-income individuals in Rhode Island.

• The Rhode Island Attorney General's Office has a Consumer Protection Unit where you can file complaints against lenders or repo agents that don’t follow the law. 

• Rhode Island Fair Debt Collections Act – Index to the Rhode Island Fair Debt Collection Practices Act.

• The Federal Trade Commission has useful consumer information regarding repossession and your rights.