Repossession Laws in the District of Columbia

You probably rely on your car every day, so if you’re struggling to make your car loan payments, you may fear having it repossessed. Repossession happens when you don’t make one or more payments on your auto loan and the auto lender takes back your car. The lender has a right to do this because an auto loan is a secured debt. The car is the collateral that “secures” the debt.

Fortunately, the District of Columbia has consumer protection laws on repossession. This article goes through how Washington D.C.’s repossession laws work and how D.C. residents can use the laws to assert their rights.

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

In Washington D.C., once you miss a single payment, the creditor has the right to repossess your motor vehicle. Some loan agreements give borrowers a grace period, which allows borrowers to pay a few days late facing penalties like late fees or repossession. Lenders must give you written notice at least 10 days before the repossession occurs. The notice will tell you that you have 10 days to make the missed payments or your car will be repossessed.

Will I Be Notified Before the Repossession? How?

D.C. law requires the debt collector to mail you a written notice at least 10 days before repossessing your vehicle. The notice needs to include the following information:

• Why the creditor considers you in default. Usually, this just specifies the payments you missed, how much money you owe, and how late you are on payments.

• How you can avoid the default. This typically involves catching up on late payments.

• When the period of notice expires. Though they need to give you at least 10 days’ notice, some lenders may give you longer.

• Your rights if the motor vehicle is successfully repossessed. This will primarily concern your right to purchase the vehicle.

If you don’t receive notice or you receive a notice that doesn’t include all of this information, then the lender doesn’t have a right to repossess your car. Reach out to Washington D.C.’s Attorney General’s office if you encounter this issue.

How Can I Prevent a Repossession?

Although D.C. law states that the creditor has a right to start the repossession process the minute that you’re late on a payment, that doesn’t mean they will start the process immediately. If you’re late on payments, your lender may send further communication requesting the payment. Use this time to catch up on payments or reach out to the lender to see if they’ll give you an extension on making payments or an alternative payment plan. The lender is more likely to agree to this if you aren’t late on payments yet.

Alternatively, if the creditor starts the repossession process, you still have at least 10 days to avoid repossession by catching up on payments. It may be difficult to come up with this money on such short notice, but if you can’t and the lender repossesses your car, you’ll suffer greater financial penalties. For instance, you’ll likely still owe money on the loan, and the repossession will damage your credit, which will make it more expensive and difficult to buy another vehicle.

What Can Repo Companies in the District of Columbia Do? 

After you default on a payment and the creditor gives you proper notice to repossess the vehicle, under D.C. law the debt collector has a right to repossess your vehicle. They can seize your car but typically they’ll hire a repossession company. The repossessor doesn’t need to provide you with any notice beyond the 10-day notice that the creditor provides. 

Repo companies have to meet certain requirements to operate in Washington, D.C. They are treated as a collection agency and must be licensed to operate. The repo company must also abide by the following rules to ensure they don’t commit a breach of the peace:

• They aren’t allowed to enter your home to retrieve the car without your permission, this includes going behind a locked gate or into your garage. But they can go on your property to get your car from your yard or driveway. They can also get the car from a public spot, like a street parking space.

• The repo company can’t breach the peace by using violence or threatening it to use violence to get the vehicle. 

• The repo agent can’t trick you into bringing your vehicle to a repair shop and then repossess the vehicle there. But if you take your car in for a real repair, the repo company can take it from the shop. 

If a repo company commits any of these actions, you should seek legal advice about bringing a claim against them. Also, keep in mind that while the repo company can’t breach the peace, borrowers can’t either. You can’t physically prevent the repo company from taking your car and you can’t use violence.

If your car is repossessed without notice, call the lender. Additionally, when the repo company takes your vehicle, they need to provide a second notice about how to redeem your car within five days of the physical repossession. If you don’t receive this, call the lender. Since D.C. has an official registration process, you can ask the repo agent for their license if anything feels off during the repossession.

What About the Personal Property in My Car? 

If you know you’re at risk of a car repossession or that one is going to occur, you should remove your personal property from the car to avoid having to reclaim it later.

If your car has already been repossessed with your personal belongings in it, the repo company is required to inform you of how to get your items. The company also needs to give you an appointment to get your items. If the repo company isn’t letting you get your property, reach out to the lender and inform them of the problem. The company must keep your car for 15 days before selling it, so this period is usually when you’ll get your personal items back.

What Happens After a Repossession in the District of Columbia? 

If your vehicle is successfully repossessed, it will be sold at an auction. The debt collector is required to give you information on the auction. You have the right to purchase your car for the full amount of the loan plus the costs of repossession, up until the auction.

If you aren’t able to redeem the car by paying that amount, the car will be sold. If someone buys your car for less than the amount of the loan and repo costs, you’ll have to pay the remaining balance. This is known as the deficiency balance. It’s calculated by adding up what you owe on the loan, plus associated costs like interest and fees for vehicle repossession, and subtracting that from the sale amount.

If you owed $10,000 on the loan, and the associated costs were $500, you owe a total of $10,500. If the car sells for $8,000 at the auction, you’ll subtract that from the $10,500 to get the deficiency amount. The deficiency balance that the borrower owes is $2,500 in this situation. 

Fortunately, D.C. law does forbid the lender from making you responsible for the whole deficiency balance if your vehicle isn’t sold in a commercially reasonable manner. They need to advertise the auction sufficiently so that interested parties will actually come. There aren’t firm requirements on this, so you would need to make a case in court that they didn’t put in reasonable effort to sell the car for market price. But ultimately if they don’t sell your car for market value, you still may be responsible for the whole deficiency balance.

The lender will have to sue you for the balance and get a deficiency judgment from the court to collect the money. Your main defenses to a collection lawsuit are if your car wasn’t properly repossessed or if the repo company damaged the car in the process.

When you’re sued, you’ll have an opportunity to “answer” the lawsuit and raise defenses. This is when you should raise a claim if you feel the lender sold your car in an unreasonable manner that resulted in a sale price that was too low. The court that hears your deficiency lawsuit can direct you to the papers that you need to file to answer a deficiency lawsuit. 

Do I Still Owe After a Repossession in the District of Columbia? 

After the lender sells the car, you’ll typically still owe money. This is especially true if your loan was underwater, meaning you owed more on your car loan than the vehicle was worth. At a minimum, you’ll owe whatever is left on the loan that’s not covered by the auction proceeds. But there are often added costs, like repo fees and anything else needed for the collection activity. If you turn in your car through a voluntary repossession or voluntary surrender, you’re still liable for any deficiency balance. But turning in your car voluntarily can save you money because you won’t have to pay repo costs.

Can I Get My Car Back After a Repossession in the District of Columbia? 

You have a right to get your car back until the auction. The only way to do this is by paying off what you owe on the loan and any costs of repossession. You’ll get more information on how to do this in the notice you receive after your car is repossessed. You’ll have at least 15 days to make this payment once the car is seized.