Repossession Laws in Hawaii

You probably use your car every day. If you have a car loan and aren’t able to make your payments, you risk losing your automobile through repossession, which can cause a lot of stress. Vehicle repossession is where your auto lender takes your car if you fail to make one or more payments. The Hawaii code on car repossessions gives borrowers some consumer protections. This piece takes you through Hawaii’s laws on repossession and how they protect you.

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

When you sign up for an auto loan, you usually have a secured debt. This means you put up collateral that the lender can seize if you default on your loan. Your car is usually your collateral. Under Hawaii state law, the contract that you sign for your auto loan controls how many payments you can miss before your motor vehicle is repossessed and whether or not you have a grace period. If your contract says the vehicle lender can repossess the vehicle the day after one missed payment, the lender can do it. If there’s a grace period, you have extra time to make the payment after the due date without it being considered late. 

Will I Be Notified Before the Repossession? How?

In the state of Hawaii, the auto lender doesn’t need to give you any notice before seizing your vehicle. When the creditor seizes your car, they must provide you with written notice that states they are repossessing your car. The notice will explain what you can do to get your car back. Hawaii gives you 21 days to object to the repossession. Your objection will typically center around if you actually made all of the payments or if you have a valid reason for not making the payments, such as if you worked out an alternative payment plan with the lender. 

How Can I Prevent a Repossession?

Since the terms of the auto loan contract explain when you can face repossession on your car, you should read it carefully. Make sure you how many (if any) payments you can miss before the lender can repossess your car. Also, figure out if the car lender gives you a grace period when you miss payments.

If at any point, you can’t make your monthly payments, you should talk to the lender as soon as possible. The lender may offer a payment extension or an alternative payment plan. Your loan servicer will be more likely to agree to this if you reach out before you miss a payment.

After the lender takes your car, you still have the option to pay the missed payments to get the car back. Under Hawaii law, the vehicle lender must give you at least 10 days to make these payments. After the 10 days but before the car is sold at auction, you can still get the car back but only if you pay off the loan in full before the lender sells your car. 

If you weren’t able to make your car payments, it’s not going to be easy to find the money to make up the missed payments or pay the full balance on the loan. But remember, you’ll still be on the hook for at least part of the loan if the lender can’t sell your car for the full amount you owe. And it’ll be costly to buy another car. 

What Can Repo Companies in Hawaii Do? 

Though the car lender has the right to seize your car, they’ll usually hire a repossession company to take your automobile. The repo company isn’t required to give you any notice before taking your car. But there are still a few conditions that they have to abide by:

• The repo company isn’t allowed to go into your home, garage, or behind a locked gate without your permission to take your car. They are allowed to take the car off your property if you have it somewhere that’s easily accessible such as the yard or in your driveway. They can also take it from a public spot like a parking space.

• They aren’t allowed to engage in a breach of the peace. In other words, they can’t use or threaten violence.

• The repo company can’t fool you into bringing your vehicle in for repairs and then take your car. But if you take your car to a repair shop for an actual issue, they can repossess your car there.

If a repo company violates any of these conditions, you should consult an attorney or legal services provider for legal advice on how to assert your rights.

Just like repossession companies, you aren’t allowed to breach the peace. It’s against the law for you to threaten violence against a repo company or physically block them from taking your car.

If you’re behind on payments and your car is seized, but the repo agents don’t give you written notice about the repossession when they take your car, reach out to the lender. In Hawaii, repo agents need a license from the state. To make sure the repossession company is legitimate, ask the agent for their license. This will help you avoid being scammed. If you didn’t miss any loan payments and your car is seized, contact the police. 

What About the Personal Property in My Car? 

If you’re at risk for repossession or know that it’s coming, you should remove your personal items from the vehicle. Then you won’t be hassled with having to retrieve the items later. The notice that the repo company gives you when they take your car should explain how you can get your items back. The repo company must give you an appointment to come get your personal belongings. Hawaii law doesn’t state how long they have to give you to get the personal items.

What Happens After a Repossession in Hawaii? 

When the auto creditor repossesses your car, they need to physically give you written notice that says you have at least 10 days to repay your missed payments after they seize your car. After that, the debt collector can sell it at auction. The notice that the repo company gives you when they seize your car will give you the details about the auction. 

Unless you’ve waived this right in the loan contract, the lender must give you 21 days to object to the repossession under Hawaii law. This 21 day period begins when your car is seized. To object, you must write a letter to the creditor stating why you don’t think your car should be repossessed. An example would be if the lender repossessed your car even though you were up to date on your payments or you arranged an alternative payment plan. If the lender doesn’t agree, then they can still sell your vehicle, but they need to respond to your objection explaining why. Hawaii law doesn’t give borrowers the right to make an objection beyond this.

After this, the lender will sell your car at an auction. If someone purchases your car for less than what you owe, you have to pay off the leftover balance. This is known as the deficiency balance. To calculate the deficiency, you’ll first add up what you owe on the loan, plus further costs like interest and the fees needed for towing, carrying out the repossession, and storage costs. From that amount, you subtract how much your car sold for at auction. For example, if you owe $14,000 on the loan, the extra costs were $1,000, and your car is auctioned for $12,000, the deficiency balance’s calculation is $15,000 minus $12,000, which is $3,000.

If you have an upside-down car loan, you’ll likely owe a large deficiency balance. An upside-down car loan is when you owe more on the loan than the car is worth. As a result, the car sale will only pay off a small portion of the balance.

The creditor is expected to sell the car in a commercially reasonable manner. This means that they must properly advertise the auction and hold a fair auction. But it doesn’t mean the lender must sell your car for fair market value. If few people show up to the auction and they only make low bids, you’ll still likely have to pay the full deficiency balance. If the creditor doesn’t advertise properly and hold a fair auction, you may only need to pay the difference between the fair market value of the automobile and the full loan.

The creditor must bring a lawsuit against you for the deficiency balance. If they win the case, they’ll get a deficiency judgment which is a court order that says you have to pay the deficiency. You’ll be able to respond to (answer) the lawsuit and raise any defenses you have. In court, the main defense you can give is that your car wasn’t seized correctly under the law, or that there are additional costs, like damages to the vehicle from the repo company, that you shouldn’t be responsible for. This is also when you’d make claims if you believe the lender didn’t sell your car in a commercially reasonable manner. 

With any claim, the court that is hearing the deficiency judgment can direct you to what forms you need to fill out to file an answer.

Do I Still Owe After a Repossession in Hawaii? 

Most vehicle repossessions in Hawaii end with a deficiency balance. This is because the proceeds from the auction are typically less than the amount left to pay on the loan. Plus the borrower is responsible for paying additional costs fees from the repo company, which can include the cost of repossession and towing plus storage fees. The lender may have fees as well. 

These fees add up. One way to minimize them is by doing a voluntary repossession, where you voluntarily surrender your car to the lender before it’s repossessed. You still need to pay off the loan in full, but the deficiency balance will be lower because the lender won’t have to hire a repo company.

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

You have a right to purchase the car until the lender sells it at auction. The notice that the repo company gives you when they repossess the car will tell you how much you have to pay. Unless you waived your right to object, the lender can’t hold an auction for at least 21 days. Once the vehicle is sold at auction, you no longer have a right to get your car back.

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

• Legal Aid Society of Hawai’i - Repossession of Personal Property

• Hawaii Code on Repossession