It is occurs all too often that I meet with a panicked prospecive client who just had their vehicle repossessed, and they cannot figure out why. Without a vehicle, they are unable to do the things many of us take for granted everyday – go to work, take their kids to school, or go to the store or pharmacy. It reinforces just how much our livelihood depends on a vehicle. Without it, you might be not be able to make a living. Now a company is demanding that they not only pay the past-due amount or the entire amount of the vehicle loan, but also towing and storage fees.
South Carolina residents should be aware of the laws that apply to your finance company, bank or lien holder repossessing your car. Consumer protections do exist in South Carolina, and knowing the rules will help you protect yourself from companies who might try to take advantage of you for their own financial gain.
To start, the only person who can legally “repossess” your vehicle is a lien holder. This is the company or person to whom you are making paying for your vehicle. If you own your car free and clear, and have title in your name only, your car cannot be “repossessed” – it would simply be theft at point, and you would need to call the police.
The South Carolina Consumer Protection Code sets forth rules dictating when, and how, a vehicle can be repossessed by a lien holder from a consumer. The South Carolina Consumer Protection Code, at 37-5-110 states that if a consumer is behind in payments on a vehicle loan, and is ten or more days late on a payment, the creditor may deliver written notice – referred to as a Right to Cure Notice – to the consumer of the payment due. The notice must conspicuously – that is, it must stand out so as to be visible – state the name, address and telephone number of the creditor to whom payment is to be made, a brief identification of the transaction (like identifying your vehicle), the consumer’s right to cure the default, and the amount of payment and date by which payment must be made to cure the default. From the date the lender delivers that notice, a consumer has not less than 20 days to cure the default and catch up the past-due payments.
The concept is simple enough – a lender must notify a consumer that they are behind, giving the consumer a 20-day period to catch up the loan and correct the missed payments. In practice, however, there are a number of pitfalls that continuously cause issues for consumers:
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Only ONE notice is required to be sent by a lender during the entire life of the loan. Even if you received a right to cure notice years ago, a lender does not have to sent you a second notice. If you miss a payment after you received a right to cure letter previously, your lender may be able to repossess your vehicle without further notice.
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Delivery of a right to cure notice is typically by mail. It’s a reality that people move all the time, and often on short notice. Mail will be sent by a creditor to the address that you, the consumer, have registered with them. Imagine a scenario where you have moved since you signed your auto loan, and your lender repossesses your vehicle without your prior knowledge. While you had spoken on the phone with your lender and told them you moved, the lender states they sent the notice to your prior address because it was the last one on file. How can you prove your lender didn’t follow the law? You want proof – in writing, as many instances as possible – showing your lender knew your address. Send mail to your lender telling them your new address and keep a copy. Send an email and keep a copy. Keep bills or other notices the creditor has sent to your new address. You have to be a protector of your own interests, because your lender will not do it for you.
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A lender is not required to sent a right to cure letter by certified mail. The law does not require you to be personally served with the right to cure notice – it only requires that it is mailed to your address, or personally given to you. Make sure to open all mail received from your lender, and keep everything.
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Be careful of anything the lender verbally states to you about payment arrangements when you are behind. Unless you document the conversations, there won’t be proof they ever happened, and a lender can produce the written notices to rely on for proof.
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A right to cure notice applies only to a consumer missing payments or falling behind on the contract. If another part of the contract has been breached – for example, if a consumer fails to maintain insurance on the vehicle – then a right to cure notice is not required and your lender may be entitled to repossess your vehicle.
If your vehicle or other property has been repossessed without a right to cure letter, you may be entitled to damages. Consult with our office to make sure you rights as a consumer are being enforced.
