An automobile can be repossessed under the Pennsylvania Motor Vehicle Sales Finance Act when two conditions are met. First, the installment sales contract must specify that the seller has a security interest in the automobile. Second, the buyer must fail to make timely payments on the purchase agreement or must breach the contract in some other way that the contract specifically says would allow the seller to repossess the car.
Peaceful Repossession
The seller or the owner of the purchase contract (creditor) can have someone come and get the automobile in Pennsylvania only if that person can take it without any breach of the peace. That means the person doing the repossession cannot break into a garage or take the car over the purchaser’s objection if the purchaser is present. If the creditor cannot take the automobile peacefully, it will have to go to court to get an order for repossession. It is a misdemeanor in Pennsylvania to breach the peace while repossessing a car.
Notice of Repossession
If the creditor takes the car peacefully, it must immediately give the purchaser a notice of repossession in person or by certified or registered mail. The notice must tell the purchaser if he has a right to reinstate the purchase contract, and if so the notice must include an itemized statement of how much the purchaser must pay to do so. The notice must inform the purchaser that the car will be sold 15 days from the date of mailing the notice if the amount is not paid, and tell the purchaser where the car is being held and the person the purchaser should pay to reinstate the contract. The notice must also tell the purchaser that he has 30 days to claim any personal property that was in the car or it will be sold.
Reinstatement
The amounts for redeeming a contract are set by the MVSFA. If the purchaser pays the amount indicated in the notice of repossession to the person named within 15 days of the notice, the creditor must return the car within 10 days.
Sale of the Vehicle
If the purchaser has not reinstated the contract within 15 days of the notice of repossession, the creditor can sell the automobile in any way that is reasonable, in either a public or private sale. The creditor is required to give the purchaser reasonable notice of the time and place of the sale. Reasonable notice is generally considered 15 days. The purchaser can buy the car at the sale. If the purchaser has paid less than 60 percent of the loan, the creditor can opt to keep the car in full satisfaction of the loan. To do this, the creditor has to give the purchaser written notice of an intention to retain the car. If the purchaser objects in writing within 21 days of the notice, the car must be sold.
Money from the Sale
Money from the sale of the car will be applied to the costs of repossessing and storing the car, the costs of the sale, reasonable attorney’s fees and the amount still due under the purchase contract–in that order. If there is still money owing on the purchase contract after all these expenses have been paid, the creditor can file a court action to get a judgment for the amount still due. This is called a deficiency judgment.
It is important to know the repossession laws of your state because if any laws are broken by the credit agency in the process of repossession, you don’t have to pay the remainder of the balance on the property and you may even be able to sue. Pennsylvania has its own repossession laws to ensure your repossession is handled properly and legally.
General Pennsylvania Repossession Laws
In the majority of cases, the law does not require the creditor to give warning before reposing any collateral of unpaid debt. However, if the creditor attempts to sale the property again, Pennsylvania repossession laws require the credit agency to notify the person in writing with a date, time and location of the sale. This gives the person the opportunity to buy the property back in full.
Pennsylvania law also requires that once an item is repossessed, the person is still obligated to pay the remaining amount of the debt. If personal property is resold, the creditor is required by law to provide that as a payment toward the remaining debt. For example, if a repossessed truck were sold for $4,000 and there were $6,000 left on the loan, the person still owes $2,000 to the creditor.
Repossession of Vehicles
When a creditor is going to repossess a vehicle, the creditor is not obligated to give warning beforehand. The creditor can repossess a vehicle the first day after the grace period stated in the contract of the loan, but this is very uncommon. The creditor will normally first try to negotiate with the person to avoid a repossession; however, if no agreement can be made, the creditor will repossess the vehicle. In addition to late payments, a vehicle can also be repossessed if the vehicle does not have insurance or any other agreements that were made at the time of the loan.
Repossession of Mobile Homes
When a creditor plans to repossess a mobile home, the creditor must give the debtor a written 30-day repossession notice and allow the person to pay the late payments to avoid repossession. The person is obligated to pay the late payments, any late payment fees and any attorney fees up to $50.
Repossession of Other Personal Property
If a creditor plans to repossess personal property other than a mobile home or vehicle, the creditor must provide a 21-day written notice. Personal property includes appliances, furniture and other personal items.
