Repossession Laws in Maryland
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Repossession is the process of taking back a car after the owner defaults on their auto loan. Each state has different laws and regulations that dictate every step of the repossession process from start to finish. This page will provide an overview of Maryland's Repossession Laws and what you should know if you've fallen behind on car payments.
Written by Upsolve Team.
Updated March 22, 2024
When you take a car loan to buy a car, you normally give the creditor or lender a security interest in the car. This allows the financing company to take, or repossess, the vehicle if you default on the loan. According to the Maryland Department of Labor’s Office of the Commissioner of Financial Regulation, cars are one of the most common types of consumer goods that get repossessed in the state.
This article is about auto repossessions, required creditor notices, and related consumer protections in the state of Maryland.
How Many Payments Can I Miss Without Risking a Repossession in Maryland?
Under the state of Maryland’s car repossession, a creditor can repossess a vehicle when the borrower defaults on the loan. A default can result from one or more missed payments, or it can result from violating other terms of the loan agreement. An example would be failing to properly insure the vehicle.
Will I Be Notified Before the Repossession? How?
While it’s not legally required, the creditor may choose to send a borrower (and any co-signers on the loan) a discretionary notice at least 10 days before retaking a car. This notice, if you get it, will inform you of the creditor’s intent to take the vehicle after a certain date. If your lender doesn’t send you this notice, it can’t require you to pay for its costs of repossession.
You’re not likely to get any other kind of advance warning about the date or time of a car repossession. State law allows for self-help repossession, which means your lender can retake your car without a court order.
How Can I Prevent a Repossession?
If it’s possible, the simplest way to prevent a car repossession is to catch up on your car payments. To find out how much time you’ve got to catch up, you should review your loan documents or any notification you get from the lender about the loan’s default. If you can’t find the information there, call your loan servicer. It’s usually a good idea to make any late payments by phone. That’s because mailed payments can get delayed, and some online payment systems make it hard to pay on past-due accounts.
If you’re temporarily unable to make your car payments, you should call your loan servicer right away to see if there’s anything you can do to avoid going into default. Depending on your circumstances, you may be able to get a temporary forbearance or have your monthly payment changed permanently.
What Can Repo Companies in Maryland Do?
Repo companies are essentially specialized kinds of debt collectors, so the state of Maryland requires them to hold a valid collection agency license. The tow truck driver might not have a copy of this license with them, but you can ask for the name and contact information of the repo company to request a copy of the license later. Repo agents can’t use force, breach the peace, or violate criminal laws when they take a vehicle.
Car repossession laws allow a repo agent to take your car off the street or right out of your driveway. If you’re present during the repossession, you can ask the agent to stop and leave your property. If the agent continues anyway, the court may consider this a breach of the peace. You should never block the agent or use physical force against them, even if you believe the car repossession is wrongful. Doing so could result in violence and/or criminal charges against you.
What About the Personal Property in My Car?
The repo company and the lender can’t keep or sell the personal property that you left inside a repossessed vehicle. You should call the repo company or your lender as soon as possible to ask how to retrieve your property. If you know you’re at risk of losing your car, you should remove all your personal items so you don't have to deal with getting them back later.
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What Happens After a Repossession in Maryland?
You’ll get at least 10 days’ written notice before your car gets sold. The notice should give you the date, time, and location of the sale. Credit grantors are required to sell a repossessed vehicle in a commercially reasonable manner, which means they have to sell it the same way they sell other vehicles and get an average market price for it. The sale can be at a public auction or it can be private.
If your car is sold in a private sale, you’ll receive a full accounting of the unpaid loan amount, the sale proceeds, and the lender’s expenses and fees. This will also tell you whether you’re entitled to leftover funds or whether the sale didn’t cover everything and you owe a deficiency balance. To calculate the deficiency balance, the sale proceeds will be subtracted from the amount you owed on the loans plus any fees or costs.
If the creditor sells the car in a public auction, the proceeds from the sale will go first to cover the costs of the sale and then to the costs of retaking and storing the car. Finally, any remaining funds will be applied to your unpaid loan balance. You’ll receive a written notice describing how funds were distributed. If the lender fails to send that letter, it can’t pursue you for a deficiency judgment.
Your lender is allowed to keep your car instead of selling it. If that happens, you won’t be on the hook anymore for repaying the rest of your loan.
Do I Still Owe After a Repossession in Maryland?
If the sale price of the car doesn’t cover the balance on your loan plus all the lender’s costs and fees, you may still owe money after the repossession. If so, you have a deficiency balance. To determine whether you owe anything, the lender will add its costs plus any fees owed under your loan contract (a prepayment penalty, for example) to the total amount you owed on the loan. Then the lender will subtract the sale price of the car. If the sale price is less than the total you owed, you’ll need to pay the deficiency.
If you voluntarily return your car to the lender, you might be able to reduce your deficiency balance somewhat by avoiding the lender’s costs of retaking the vehicle.
Can I Get My Car Back After a Repossession in Maryland?
Consumer protection laws require the creditor to send a notice within five days after a car repossession that tells you about:
Your right to redeem your car.
Your liability for any deficiency.
Where the vehicle is being stored.
Where you need to send payments to redeem your car.
The creditor must then keep your car for 15 days to give you a chance to redeem your property (get your car back) and reinstate the loan contract. To reinstate your loan, you’ll need to catch up on all your payments, pay any late fees, and reimburse the lender for its costs of repossession if the discretionary notice was sent. You’ll have to pay the entire loan balance if your car was previously repossessed within 18 months of your current default or if you engaged in certain fraudulent contact involving the car.
