Repossession Laws in New Mexico

If you still owe money on your vehicle and can’t make the monthly payment, you’ll be in danger of having your vehicle repossessed by the lender. Repossession is when a lender takes back your car because you break your car loan contract, usually by missing a payment. Repossession laws are very similar in most states, but each state’s laws have important differences. This article will explain the basic information you need to know about how New Mexico repossession laws work.

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

While you’re paying off your car loan, your lender has a security interest in your vehicle. This is what gives the lender the right to repossess your vehicle if you fail to repay the loan as promised or break another term in your car loan contract. This is referred to as being in default. You have to be in default before your lender can repossess your car to enforce its security interest. Even being one day late on a single month’s payment can mean you’re in default.

Check your contract to see if it provides a grace period before you’re in default. A grace period is extra time to make your payment past the due date. Just because you have a grace period before getting charged late fees doesn’t mean you also have a grace period before being in default. Review your contract carefully.

Most contracts also say that you’re in default if you don’t keep the required collision or comprehensive insurance on the vehicle.

Will I Be Notified Before the Repossession? How?

Lenders aren’t required to give you any notification before they take your vehicle in New Mexico. Your auto lender might give you a warning by phone or mail if it chooses to, but it’s not legally required.

How Can I Prevent a Repossession?

As a practical matter, if you’re a little late making your payment once or rarely, your lender is unlikely to immediately repossess your car. But that doesn’t mean you’ve got time to waste. Once you’ve missed a payment due date, you can avoid repossession by catching up on your loan payments before your lender takes action. Calling your lender to discuss this can’t hurt. 

You need to get caught up before your lender sends a repossessor or accelerates your loan. Acceleration means your entire outstanding loan becomes due. A lender can accelerate a loan any time after you default. Many car loan contracts waive the buyer’s right to receive any notice before the lender accelerates the loan. Your lender may refuse to accept a late payment if it has already accelerated your loan. 

If you think you’re going to have trouble making the next month’s payment on time, it’s a good idea to contact your lender before your payment is due. Your loan company might be willing to work with you. For example, it may agree to allow you a little more time to pay. You also might be able to defer the payment so that it gets added to the back end of your loan. Your lender is more likely to work something out if you’ve never, or rarely, been late.

It may be possible to prevent repossession in the short- or long-term by filing for Chapter 7 or Chapter 13 bankruptcy.

Hiding your car to keep it from being repossessed could lead to criminal liability. For example, keeping it in someone else’s closed garage to try to hide it from repossession might be considered a crime. But simply parking it in another person’s closed garage for other reasons wouldn’t be unlawful. Also, you should be fine even if you start parking in your own garage to protect your car from repossession.

What Can Repo Companies in New Mexico Do?

A motor vehicle repossession can take place anywhere a repossessor finds your vehicle unprotected. That means not only a public street but also a business’s publicly accessible parking lot or a private home’s driveway. Even an open home garage is fair game! 

They Can’t Breach the Peace

What a repo company can’t do is cause a breach of the peace. This covers a wide range of actions, including:

• Entering a closed home garage without permission

• Breaking a locked gate to enter a driveway

• Repossessing your vehicle after you or someone else objects — unless the vehicle has already been hooked up to a tow truck or loaded on a trailer

• Using or threatening to use physical force

• Damaging or threatening to damage property

Although it may sound strange, it’s also almost always a breach of the peace for a law enforcement officer to be present during the repossession.

You Can Peacefully Object to a Repo

You have every right to object to the repo before your car is connected to the repossessor’s vehicle. You can tell the repossessor not to take the car or to get off your property. You can even object by sitting in your car or standing in the way of it being repossessed. You won’t be able to stop the repossession forever, but the repo should stop for now. Your creditor can try to repossess the vehicle another time or can ask a court for an order to get the vehicle. 

But you can’t get physical with the person trying to repossess your car or interfere with the repossessor’s own vehicle or equipment. If you do, you may wind up facing civil or criminal liability.

A Repo Company Must Be Licensed

Vehicle repossessions can only be carried out by a business licensed as a repossessor by the New Mexico Financial Institutions Division. A repossessor must also have a warrant to use towing equipment from the New Mexico Public Regulation Commission. You can look up the repo company if you want to make sure it has a current license to repossess vehicles in New Mexico. To verify that a repo company has a proper warrant for towing vehicles, call the New Mexico Public Regulation Commission’s Transportation Division.

Vehicles Can’t Be Repossessed From Tribal Lands Unless Tribal Law Allows

If your vehicle is within the boundaries of one of the 23 Native American tribes located within New Mexico, that tribe’s law dictates whether a lender can repossess your vehicle. For example, many tribes don’t allow repossession without the owner’s permission or an order from the tribal court. That said, anytime your vehicle leaves the reservation, it’s vulnerable to repo under New Mexico law.

There Are Limits on Repossessing Vehicles Purchased by Servicemembers

The federal Servicemembers Civil Relief Act protects against self-help repossession. If you’re a member of the military and bought a vehicle before you entered military service, it can’t be repossessed during your service without a court order.

What About the Personal Property in My Car?

If you think you’re at risk of having your car repossessed, it’s a good idea not to leave any personal belongings in it anytime you aren’t in the car. You’re allowed to get your personal belongings back after a repo, but it’s a hassle you don’t need. Also, if something’s missing, it may be hard for you to prove it was in the car.

Towing services are responsible for the safekeeping of items left in towed motor vehicles. That doesn’t mean they need to take everything out and lock it up, though. You have the right to a reasonable opportunity to get your belongings back. You can’t be required to pay any charges to do so. Contact the towing company directly as soon as possible to get back anything you left in the car. If you don’t know who took the car, ask your lender. 

What Happens After a Repossession in New Mexico?

Your lender will sell your vehicle at either a public auction or a private sale. Lenders must give borrowers written notice and send it a reasonable amount of time before the sale. What a court considers reasonable depends on the circumstances, but anything less than 10 days isn’t enough. The notice must also provide you with specific information about the debt, the vehicle, and how you can get the vehicle back. 

The notice must say whether the vehicle will be sold at a public auction or a private sale. 

• If it’s going to be a public auction, the notice has to tell you the date, time, and location of the auction. You or anyone you know can go to the auction to bid on the vehicle. With help from friends or family, you might be able to buy the vehicle for less than its market value.

• For a private sale, the notice has to tell you what the earliest date is that a private sale may take place.

Your lender must sell the vehicle in a commercially reasonable manner. This doesn’t mean that the lender has to sell the vehicle for a fair market value, but it must advertise the sale appropriately and try to get reasonable bids for the car. Cars sold at auction usually fetch a far lower price, and that’s still commercially reasonable in most cases. But a private sale by a small, local lender to the owner’s cousin for a quarter of the value would be suspect. Not selling the car for so long that its value drops might call into question a sale’s reasonableness as well.

The amount your vehicle sells for at the public auction or private sale will determine how much the deficiency balance is. The deficiency is the amount you still owe after the sale proceeds are used to repay the repo costs and the loan balance. The proceeds from the sale first go to all reasonable costs of the repossession and sale. These include the cost of towing and storing the car as well as costs to prepare the vehicle for resale and sell the car and possibly attorney fees. After all those costs are paid, any remaining sale proceeds go toward reducing your debt on the car loan.

It’s a good idea to consult with a lawyer if you think there was anything wrong with the repossession process, such as:

• You weren’t in default on your loan at the time of the repo.

• There was a breach of the peace during the repo.

• You didn’t get the required notice.

• There was a problem with the lender’s sale of the vehicle after it was repossessed. 

Do I Still Owe After a Repossession in New Mexico?

Repossession is just about the secured party (your creditor) taking the loan’s collateral (your car) and selling it to get back at least some of the money you borrowed. It doesn’t get rid of your responsibility for the debt. There will almost always be a deficiency balance after your creditor sells the vehicle. If you were upside-down on your car loan (owed more than the car was worth), you’ll certainly have a deficiency balance. Even if you weren’t upside-down, you could still have a deficiency because your creditor can resell the car for less than market value. 

Many people who can’t afford to pay their car loan decide to voluntarily turn in their car to the lender instead of waiting for the lender to repo it. This so-called voluntary repossession doesn’t get rid of your liability for the loan. But voluntarily turning in the car should reduce your deficiency balance. Remember that the deficiency includes the unpaid loan balance and the costs involved in the repossession and resale of the car. Voluntarily surrendering your car will at least save the cost of a repossessor coming out to take it. That could be hundreds of dollars.

If your creditor wants you to pay the deficiency balance, it’s required to send you a written explanation of how it calculated the deficiency. The explanation must show the amount of your unpaid debt, the costs involved in the repossession and sale, and the amount the vehicle was resold for. If you don’t want to wait for your creditor to send you a demand for payment and explanation of deficiency, you can request it. Your creditor then has to provide it within 14 days.

If you don’t pay the deficiency, your creditor may sue you. Your creditor could also sell the remaining debt to another company, which then could come after you for the debt.

Can I Get My Car Back After a Repossession in New Mexico?

With the possible exception of filing for bankruptcy, the only way to get your car back after it’s been repossessed is to redeem it. Redemption requires you to pay the entire remaining balance of the car loan, plus any costs involved in the repossession. That includes the cost of the repo towing service, storage fees, and possibly attorney fees. You must pay all these amounts before your creditor sells the vehicle. The notice your creditor has to send you before the sale must tell you how you can redeem your vehicle.

Where Can I Find More Information About Repossession Laws in New Mexico?

• New Mexico Legal Aid provides free legal advice or representation if you qualify for services and if it accepts your case. They also have good information on repossession in New Mexico.

• New Mexico residents who are age 55 or older can get free legal advice from the State Bar of New Mexico’s Legal Resources for the Elderly Program.

• The National Association of Consumer Advocates is a good place to look for private consumer law attorneys in New Mexico. Depending on the facts of your case, an attorney might agree to take your case without you having to pay any fees or costs unless the attorney is successful and gets the opposing party to pay.

• You can also find attorneys through the State Bar of New Mexico.