Repossession Laws in North Dakota

North Dakota has one of the best economies in America. Its unemployment rate is among the lowest in the U.S. But a job isn't worth much if you can't get to it. Most North Dakotans need a car or truck to get to work. If you’ve used an auto loan to pay for your motor vehicle, your lender or lienholder can repossess it if you miss a single payment or violate part of the loan contract. Repossessions are when the lender takes the car it financed back from the borrower. Because the creditor has given you money for the car, they have a security interest in it, which gives them certain legal rights. 

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

Missing a single payment is enough to have your car repossessed under North Dakota repossession laws. Paying even a day late is enough to allow the lender or lessor to repossess a vehicle. But rarely will lenders be that aggressive. 

Will I Be Notified Before the Repossession? How?

Lender or lessors aren’t required to notify a borrower before a repossession under North Dakota repossession law. In North Dakota, there are a couple of exceptions to the general rule that the lender doesn't have to notify you of repossession, including if:

• Your loan contract requires the lender to inform you of its intent to repossess.

• The vehicle is on a Native American reservation. Unlike state law, reservation laws require that lenders have a court order to repossess a car. You and the lender may have to attend a court hearing for the lender to get this order.

It's a good idea to check your loan contract to see if the lender is required to give notice.

How Can I Prevent a Repossession?

The best way to prevent repossession is by not falling behind on your loan. But, of course, that's easier said than done. Everyone experiences financial challenges at times. If you’re struggling financially, contact your lender or creditor to see if they have any options to help you. They may be able to reduce your monthly payments or give you a temporary forbearance that allows you to pause your payments.

If your lender isn’t willing to work with you or if you have a predatory lender, you may want to refinance the loan. Refinancing can help you reduce your monthly payment and end your risk of repossession.

What Can Repo Companies in North Dakota Do?

When a repo company attempts to repossess your car, they can't commit a breach of the peace. This means if you catch them and you object to the repo, they have to leave. It doesn't mean you can make them leave by force. If you try to force them to leave, you may have committed a breach of the peace. 

Repossession companies also can't break in to take a vehicle. If your motor vehicle is behind a locked gate or in a garage, they can't repossess it. If your car is in a carport, they probably can repossess it. They can repossess your motor vehicle from a parking lot while you're at work or while you're shopping. If you keep your car locked in your garage, they'll eventually get a court order requiring you to turn the car over to them.

There aren’t any special licensing requirements for repo companies in North Dakota. If you have any concerns about the repossession being legitimate, you can call your lender or the local police.

What About the Personal Property in My Car?

If there’s personal property like your wallet or purse in your car when it’s repossessed, the repo company must return it to you. But getting your property back can be a hassle so it’s a good idea to remove any personal property from your vehicle if you’re at risk of repossession. In North Dakota, repossession companies are also allowed to charge you for holding your personal property. Removing your property from the vehicle allows you to avoid this cost. 

If your car is repossessed with your personal items in it, call the repo company to get your things back. If that doesn't work, contact your lender or creditor. If that doesn't work, it's time to seek legal advice from an attorney.

What Happens After a Repossession in North Dakota?

After the lender (also called a lienholder) repossess your vehicle, they’ll sell the car at an auction or private sale. Under North Dakota's version of the Uniform Commercial Code (UCC), the lender is required to notify you of the type of sale, the date/time, and the place of the sale. The lender should send this notification within a reasonable time before the sale. The North Dakota UCC says that 10 days is a reasonable time. 

According to the North Dakota Century Code, the sale of the repossessed vehicle must be commercially reasonable.  This doesn’t mean the car must sell for its fair market value, but the lender must sell it at a reasonable price considering the type of sale. For example, if advertised auto auctions are the normal way to sell a repossessed car, that’s commercially reasonable. But, if no one shows up and the creditor bids $1 and buys the car for that amount, that’s not commercially reasonable. 

It’s important that the car is sold in a reasonable way because the lender will use the proceeds to pay the repossession costs and the car loan balance. If the sale price isn't enough to pay all this, you'll have a deficiency balance. This means you'll still owe on the car even though it's no longer your car. You’ll almost certainly have a deficiency balance if you’re upside-down on your auto loan, which means you already owed more than the car is worth.

Do I Still Owe After a Repossession in North Dakota? 

If the auction or sale proceeds don’t cover the repossession fees and the total amount you owe on the loan, you’ll still owe after the repossession. For example, if your car loan balance is $7,000 and it costs the lender $1,000 to repossess the car. You owe $8,000 minus the amount the car sold for at auction. If the sale proceeds were $5,000, you’ll owe $3,000. The creditor can sue you to collect this money. If the lender wins the lawsuit, it can garnish your wages or levy your bank account.

One way to minimize your deficiency balance is by voluntarily surrendering the vehicle to the dealership or lender before it’s repossessed. This is called voluntary repossession, and doing it helps you avoid paying the cost of repossession. Using the numbers in the example above, if you’d voluntarily surrendered your car, your deficiency would have been $2,000 instead of $3,000.

In rare cases, there may be a surplus after the repo sale. In the example above, if the car’s sale proceeds had been $10,000 at the repossession sale, there would be a surplus of $2,000. In that case, the lender would have to pay to you that money. 

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

In North Dakota, you can redeem a repossessed vehicle at any time before the vehicle is sold. To redeem the vehicle and get it back, you'll need to pay the total amount you owe on the loan plus the repossession expenses and other collection expenses. Most people aren't able to do this because they wouldn't have been behind in the first place if they had that much money. But it may be possible to find a reasonable loan you can use to redeem the vehicle. But getting your car back after it’s sold is much more complicated.

You may be able to file bankruptcy to get your car back or to make your car loan payments more affordable (if you file prior to the repossession). It's a good idea to consult with a North Dakota attorney to get legal advice on whether this is possible. 

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

The following links provide helpful legal information in North Dakota:

• Legal Services of North Dakota provides legal advice regarding repossessions to low-income and elderly North Dakotans.

• NDB.Courts.gov has info on how to file bankruptcy without an attorney.

• NDCourts.gov has a useful Legal Self-Help Center.

• The Attorney General of North Dakota has useful consumer rights information.