Repossession Laws in North Carolina

What Is Repossession?

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.

You can also check your car loan contract or ask your lender if you you can cure your default by paying the past-due amount. Curing a default means catching up on your missed payments to bring the loan current and avoid repossession.

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.

You can also voluntarily give up your car to the lender. Doing so can help you prevent an unexpected repossession and potential additional towing and repo costs and fees.

Can Bankruptcy Stop Repossession in North Carolina?

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. 

What Can Repo Companies in North Carolina Do?

In North Carolina, lenders are allowed to use what’s called self-help repossession. That’s just a legal term for taking back your car without going through the court system first—if your car was used as collateral for the loan.

But self-help doesn’t mean repo companies can do whatever they want. There are important limits:

• They can tow your car from places like your driveway, a store parking lot, the street, or even your workplace—if it’s in a public area.

• They can’t take your car from a locked garage, behind a locked gate, or from a locked storage unit.

Repossession agents also can’t “breach the peace.” That means they’re not allowed to threaten you, use violence, or cause a public disturbance. Courts have even said they can’t bring along a uniformed police officer, because that crosses the line from self-help into intimidation. If you think a repo agent broke the rules, you can report it to the North Carolina Attorney General’s Office.

Finally, if you’re an active-duty service member, you have extra protections under the Servicemembers Civil Relief Act (SCRA). A creditor must get a court order before they can repossess your car.

What About the Personal Property in My 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’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. 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.