Repossession Laws in North Carolina

Whether you’re living in North Carolina’s Appalachian mountains, the college bustle of Chapel Hill, or a seaside Atlantic coastal town, you probably rely on your car to get around in the Tar Heel State. The North Carolina Division of Motor Vehicles reports that over 9 million cars are registered. If you took out a loan for your car, missed payments put you at risk of having your car repossessed. Car repossession laws also apply to pickup trucks and boats. 

When your vehicle is repossessed, it can be towed away when you least expect it. Lenders are allowed to repossess your vehicle because when you take out a loan for a motor vehicle, the car secures the loan. The lender has a security interest in the car, which means they can take your car if you stop making payments. You can take action to avoid repossession, and you might be able to get your car back after repossession. 

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

In North Carolina, a lender can legally start the repossession process as soon as a borrower misses one payment. But the actual repossession timeline will depend on the terms of the contract. If you think you’re going to be late with a payment, take time to review the fine print of your contract to determine when your vehicle can be repossessed after you miss a payment or default on the loan. You can also call the lender and ask them to explain this.

Will I Be Notified Before the Repossession? How? 

In North Carolina, lenders aren’t legally required to give you a notice before repossessing your car. This means that if you’ve defaulted on your auto loan, the repossession company can take your car while you’re at work or while you’re at home sleeping with no prior notice. There’s a slight chance that your contract will include a clause that requires the lender or creditor to give you prior notice. Review your loan agreement to see if a notice is required. 

How Can I Prevent a Repossession? 

You’ll save yourself some money and a headache if you can prevent repossession. Try calling your lender before you’re late with your car payment to see if you can make other payment arrangements. In a “right to cure state,” you have a certain amount of time to pay your past-due debt by state law. North Carolina has that right for certain foreclosure matters, but not for motor vehicle repossession. Your contract and your lender determine whether you can cure your default by paying the past-due amount. 

If you had a life change that affects your monthly income and expenses and you don’t think you can pay the amount due on time, talk to your lender about refinancing your car loan.  Refinancing your car loan can also help if you owe more money than your car is worth. If catching up on payment seems impossible, consider selling your car to pay off your loan to help maintain your credit.

A defaulted loan can quickly rack up extra expenses for late fees and repossession costs such as towing fees. If you’re at the point where you have uncontrollable debt from credit cards, foreclosure, and your car loan, you might consider filing bankruptcy. When you file bankruptcy, an automatic stay is put into place that will stop collection activity from creditors, at least temporarily. 

You can also voluntarily give up your car to the lender. This prevents unexpected repossession by a repo company. When you surrender your car to your lender it’s called voluntary repossession. There are a few advantages to doing this. You’ll prevent the towing and repo costs and fees from being added to your account, and you can schedule the drop-off time with your lender. 

What Can Repo Companies in North Carolina Do?

Self-help repossession is allowed in North Carolina, but that doesn’t help you. A self-help repossession allows a creditor to help themselves to your car without a court process if the car is used as collateral to secure a loan. There are limits to self-help repossession. Your car can be towed from your driveway, but not if it’s behind a locked gate or in a locked garage or storage unit. A repo company can tow your car from the garage or parking lot at work if it’s a public area. They can also tow your car from a store parking lot or if it’s parked on the side of the street. 

Under North Carolina law, repossession agents can’t breach the peace when they repossess your car. Generally, a breach of the peace means disturbing the public. The repo man (or woman) can’t use threats or acts of violence. The courts have also held that repossession agents can’t have a uniformed police officer or other similarly uniformed officers with them because that’s not considered self-help. You can report an illegal repossession to the North Carolina State Attorney General’s office. 

Active military members are protected from self-help auto repossession under the Servicemembers Civil Relief Act (SCRA). A creditor must get a court order to repo a car from an active military member. 

What About the Personal Property in My Car? 

You’re entitled to your personal property, but if you’re in North Carolina you’ll have to call the lender to make arrangements to get your personal belongings out of the car. If you think car repossession is right around the corner, make an effort to clear out your personal belongings as soon as you can. You can call the police department to confirm the repossession and find contact information for the towing company. You can also call the repo company to find out how to get your personal items back. 

Tow truck companies and repossession companies are generally prohibited from keeping personal property, and this is sometimes stated in local laws. If you have difficulty retrieving your items, contact the state attorney general’s office. 

What Happens After a Repossession in North Carolina? 

After your lender or creditor has repossessed your car in North Carolina, it can be sold at a public auction or in a private sale. The creditor must send you written notice about the public auction or private sale. This notice must include the date, time, and place of the auction. You can attend the public sale and bid on the repossessed vehicle or have others bid on your behalf. 

After the sale, the proceeds will go toward the balance of the loan due plus late fees or penalties. But first, it will go to pay any repossession fees such as towing costs, storage, and insurance. This means you’ll owe more than just your past payments.

Do I Still Owe After a Repossession in North Carolina?    

Your car can be sold to the highest bidder, and if it’s sold for less than the amount you owe (including the repo fees and other costs), your debt isn’t cleared up. When this happens, you’ll owe a deficiency balance. Voluntarily surrendering your car will lower your deficiency balance because you won’t have to pay the cost of repossession. 

Can I Get My Car Back After a Repossession in North Carolina?

The Tar Heel state doesn’t have a law that gives you the right to redeem your car by paying the full amount due, but you can review your contract to see if it grants you a right of redemption. You can bid on your car at a public sale, and you can have a friend buy your car for you if you want to get it back after it’s repossessed.

Where Can I Find More Information About Repossession Laws in North Carolina?

• Legal Aid of North Carolina – Provides legal assistance to low-income individuals in North Carolina for civil matters include repossession.

• North Carolina Department of Justice – Information on car repossession from the North Carolina Department of Justice. 

• LawHelpNC.org – Consumer car repossession quick facts by Legal Aid of North Carolina. Includes contact information for legal assistance.

• North Carolina General Statutes – Table of Contents to North Carolina state laws from the North Carolina General Assembly website. 

• North Carolina Uniform Commercial Code – Text of repossession laws in North Carolina.