Repossession Laws in Kentucky

What Is Repossession?

Repossession happens when a lender takes back a vehicle because the borrower has fallen behind on payments. This usually happens with car loans, where the car itself acts as collateral. That means the lender has the right to take the car if the loan isn’t paid as agreed.

Each state has its own laws about how repossession works. In Kentucky, lenders have a lot of flexibility when it comes to taking back a car. Still, you do have rights, and lenders must follow certain rules during the repossession process.

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

In Kentucky, a lender can repossess your car after you default on the loan. But state law doesn’t say exactly how many missed payments count as a default. That’s usually spelled out in the contract you signed when you bought the vehicle.

In many cases, you could technically be in default after just one missed payment. Some lenders might wait longer, but they’re not required to.

📌 Check your loan agreement so you understand when repossession might become a risk.

Will I Be Notified Before the Repossession? How?

In Kentucky, lenders don’t have to give you a warning before they repossess your car. That means your vehicle could be taken without any advance notice if you're in default.

📄 However, your loan agreement might include some kind of notice requirement. It should explain whether the lender will contact you first and how they’ll do it. It’s a good idea to review your contract so you know what to expect.

How Can I Prevent a Repossession?

There are two main ways to stop a repossession:

• Catch up on your loan payments

• File bankruptcy

If you're struggling to make your car loan payments, you can also contact the lender. The sooner, the better. The lender may agree to work with you to lower the payment amount and allow you to keep your car. Repossession is costly for lenders, so many are willing to work with borrowers who contact them early.

Should I Consider a Voluntary Repossession?

When you know you won’t be able to make the car payments on your vehicle anymore, you may want to consider a voluntary repossession.

💡 A voluntary repossession is when you return your car to the dealership where you purchased it or to the lender.

Voluntarily returning your car can help you avoid the added costs of repossession. It also avoids having neighbors and friends witness your car being towed by a repo company.

What Can Repo Companies in Kentucky Do?

The state of Kentucky has strict rules for repossession companies, but there's a lot they can do:

• They’re allowed to repossess your vehicle if it’s on public property.

• They’re allowed to go onto your private property to repossess the vehicle, but they can’t commit a breach of the peace.

Breaching the peace includes entering any space that is locked, without a court order. If the repo men come onto your property to collect the car, you also can’t breach the peace or use physical force against the repossession company employees. 

There are no licensing requirements for repossession agents in Kentucky. If you have any questions about the repossession being legitimate, you can contact your lender or the local police.

What About the Personal Property in My Car?

If your car is in danger of being repossessed, remove all your personal belongings. If the car is repossessed with your things inside, the repossession company is required to allow you to retrieve them, but this can be an inconvenience. 

The lender is required to send written notice of which company has repossessed your car and how to reach them.

These rules only apply to loose items and items that are easily removed from the vehicle, such as a booster seat. Any upgrades or modifications, such as a stereo or a spoiler, may not be removed. 

What Happens After a Repossession in Kentucky?

🗓️ For the first 20 days after repossession, you’re able to get your car back after paying the lender the entire principal, interest, and fees for the loan.

If you don’t pay to have your car returned to you during this 20-day holding period, you’ll receive a notice that tells you what the creditor plans to do with the vehicle.

Public Auction

The creditor can sell the car at a public auction or through a private sale. They must give you notice of when and where the sale will be held, although state law doesn't say how much notice they have to give you.

The lender is also required to conduct the sale in a commercially reasonable manner. For example, they can’t sell your car for a price that’s significantly lower than its fair market value, especially if they seek a deficiency balance.

✋ You are allowed to bid on the car at the sale.

Can You Get Your Car Back Before It’s Sold?

Yes, Kentucky law gives you the right to get your car back after it’s been repossessed as long as it hasn’t been sold yet. This is called redemption.

To redeem your car, you’ll usually need to pay the full balance of the loan — not just the missed payments. That includes the remaining loan principal, any unpaid interest, late fees, and costs the lender paid to repossess and store the car.

✍️ If you’re considering this, you can request a written payoff amount from the lender so you know exactly what you’d need to pay.

Some lenders may offer a different option called reinstatement, which lets you get the car back by paying just the overdue amount. But this isn’t required by Kentucky law, and not all lenders offer it.

90-Day Time Limit

If you’ve paid a minimum of 60% of the cash price of the vehicle at the time it’s repossessed, the creditor has 90 days to sell the car. The 90-day time limit doesn’t apply if you’ve paid less than 60% of the cash price.

The lender isn’t allowed to just keep the car and pursue you for the amount you owe under the contract terms. Instead, if the lender chooses to keep the vehicle, you must agree to it in writing, and the creditor must release you from the contract. 

What if My Car Sells for Less Than It’s Worth?

After the sale, the lender will send you a statement detailing how much you owe and how much the car sold for. In many cases, there is a deficiency balance. This means that the sale price didn't cover the total you owed on the car. In this case, you'll be responsible for paying the balance.

💰 Take note that the amount you owe doesn’t consist just of the past-due balance under the loan agreement. It also includes late fees, attorney fees, and the cost of repossession. 

If your car sells for less than what you owe, review the sale documents closely. Kentucky requires lenders to sell cars in a “commercially reasonable” manner.  This means the sale must be made in good faith and follow commonly accepted practices. For example, if the lender placed unreasonable restrictions on who was allowed to bid at the auction where your car was sold, they would be in violation of this requirement. 

This is important because if you have a deficiency balance, the creditor will try to collect the money. If you can’t pay it, they may sue you to get a deficiency judgment from the court.

Do I Still Owe After a Repossession in Kentucky?

Yes, in most cases, you’ll still owe money even after your car has been repossessed. Repossession doesn’t erase the loan. You’re still responsible for paying the full amount you agreed to when you signed the loan contract — minus whatever the lender gets from selling the car.

Lenders often add extra fees to your balance after a repossession. This can include late fees, repossession and storage costs, and sometimes attorney or court fees. Remember, if the sale of the car doesn’t cover everything you owe, the remaining amount is called a deficiency balance, and you’re still on the hook for it.

Some people choose to voluntarily surrender their car instead of waiting for the lender to take it. This won’t erase the loan, but it may lower the repossession costs added to your balance, which could make the remaining amount more manageable.

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

Kentucky repossession laws do provide ways to get your car back after repossession. Two of the ways you can do this are by:

• Filing bankruptcy (in limited cases): If the lender still has your car and hasn’t sold it yet, filing bankruptcy might help you get it back — but it depends on your situation. The automatic stay that comes with bankruptcy can sometimes pause the process or give you a chance to negotiate. This usually works best if the bankruptcy is filed before the car is taken.

• Redeeming the property: Kentucky state law is clear that up until the car is sold, you have the right to get your car back. To do so, you must pay off the amount you owe in full, as well as any reasonable additional costs and expenses incurred by the creditor.

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

• Kentucky Justice Online has a helpful Repossession FAQ and other information on Property Repossession. 

• The Federal Trade Commission (FTC) has Consumer Information on Repossessions.

• Kentucky Legal Aid provides free legal assistance to low-income, disabled, and elderly Kentucky residents with civil issues such as repossession.