Repossession Laws in Pennsylvania

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

In Pennsylvania, your lender can repossess your car if you default on your loan. Default usually means missing payments, though it could also happen if you let your required insurance lapse.

The tricky part is that your loan contract sets the rules. Some contracts say you’re in default if you’re even one day late. That means, in theory, your lender could start the repossession process after a single missed payment.

In reality, many lenders don’t act that quickly. Repossession costs them time and money, so most will wait until you’re further behind. Still, it’s important to know that legally, they could move forward right away if your contract allows it.

Will I Be Notified Before the Repossession? How?

In Pennsylvania, your lender doesn’t have to warn you before taking your car. The law allows repossession without advance notice if you’re in default.

But you must be notified right after your car is repossessed. The lender has to either hand-deliver a written notice or send it by certified mail. In most cases, you’ll receive the certified letter the next day. This notice explains what happened and what steps you can take next.

How Can I Prevent a Repossession?

If you can't afford your car loan payment, contact your lender right way to ask about your options.

You may be able to get a forbearance and temporarily pause your payment. Or the lender may be willing to negotiate better loan terms. 

If your lender isn’t willing to work with you, consider refinancing your loan with another lender.

What Can Repo Companies in Pennsylvania Do?

In Pennsylvania, lenders and repo companies are allowed to take your car from many different places, but there are limits on how and where they can do it.

They can take your car from:

• Your driveway

• A grocery store parking lot

• The street

• Other public areas

They can't take your car from:

• A locked garage

• A fenced yard with a locked gate

Repo agents also cannot breach the peace. This means they can’t use threats, force, or cause a public disturbance.

If you’re there when they try to take your car, you can tell them to stop. If they ignore you, that counts as a breach of the peace. They might still take the car, but you shouldn’t use force to stop them since that could put you in danger or lead to criminal charges.

In Pennsylvania, repo companies also have to be licensed with the Department of Banking and Securities. If a repo company breaks the rules, you can file a complaint with that department. In some cases, a company could even lose its license for misconduct.

What About the Personal Property in My Car?

In Pennsylvania, you have any personal property that was in the vehicle when it was repossessed returned to you. You have 30 days from the date of the notice of repossession to recover your property. After 30 days, the company that repossessed the car may dispose of your property however it wishes.

If you know your car is at risk of repossession, it’s good to remove any personal property from the car, so you don’t have to deal with working against this deadline to get it back.

If you have trouble getting your personal property back from the repossession agent, call the lender. If you still can't get the property back, get legal advice quickly. You only have 30 days, and you may need to file a lawsuit to get your things back.

What Happens After a Repossession in Pennsylvania?

After the lender repossesses your car, it will send you a notice the next day. In Pennsylvania, lenders are required to include certain information in the repossession notice to comply with the Motor Vehicle Sales Finance Act. This includes:

• That you have a right to reinstate the loan and redeem (get back) your car if the lender allows it.

• An itemized statement showing how much you need to pay to redeem the vehicle or reinstate the loan.

• Notification that the seller intends to sell your vehicle at least 15 days after the date of the notice.

• Information about where the vehicle is stored.

• The name and address of the person the buyer needs to make payment to or needs to serve any documents on.

• A statement that your personal items will be held for 30 days from the date of the notice.

• The name and address of the person you need to contact to get a full accounting of the money you owe.

Under Pennsylvania’s version of the Uniform Commercial Code, that same notice should also contain the following information:

• The name of the debtor and the lender

• A description of the collateral (in this case, the repossessed car)

• How the lender intends to sell the repossessed car (public auction or private sale)

• The time and place of the public auction or the time when a private sale may first occur

• An explanation that the borrower may have to pay a deficiency if the proceeds from the sale of the vehicle aren’t enough to cover the loan balance plus the costs of repossession

• A phone number for a person that can tell the borrower what they must do to redeem the vehicle

• A phone number or address for information about the sale or the amount owed

It's important to consult with a Pennsylvania attorney if your notice doesn't contain all the required items. You may be able to file a claim against the lender if the lender sells the vehicle and hasn’t given the proper notice requirements.

Every aspect of the vehicle’s sale must be commercially reasonable. This means the sale must be fair and sold with commonly accepted commercial practices. For example, selling the car at an auto auction that was advertised over at least the last week would be commercially reasonable. Selling the car to the lender’s brother for $1 wouldn’t be commercially reasonable.

When a sale doesn't bring in enough money to pay the balance of the loan plus the costs of repossession, you have to pay the difference. This is called a deficiency balance.

You’re more likely to end up with a deficiency balance if you’re already upside-down on your loan, which means you owe more than the vehicle is worth. If the sale proceeds are more than what you owe plus the cost of a repossession, the lender owes you the surplus.

Do I Still Owe After a Repossession in Pennsylvania?

If your car doesn’t sell for the amount you owe on the loan plus the lender's repossession costs, you’ll owe a deficiency balance.

If the lender takes you to court to collect on the deficiency balance by getting a court order called a deficiency judgment, you can raise defenses. One defense may be that the sale price wasn’t reasonable or the sale wasn’t conducted fairly. The judge will decide. 

If the judge determines the sale price wasn't reasonable, your deficiency balance or surplus will be determined based on what the judge decides is the reasonable value of the vehicle instead of the sale price.

If the lender doesn't sue you, you can sue the lender to have the judge decide the value of the vehicle and determine if you have a lower deficiency balance or a surplus.

The costs of the repossession of a vehicle are part of the calculation of any deficiency balance. If you voluntarily surrender the vehicle, you won't be liable for these costs.

Can I Get My Car Back After a Repossession in Pennsylvania?

If the lender agrees, you can reinstate the car loan before the vehicle is sold, if you:

• Catch up on all the payments you're behind on,

• Come to an agreement with the lender about late fees, and

• Come to an agreement with the lender about the costs of repossession and the costs of collection including any attorney's fees and court costs.

You also have the right to redeem the vehicle. This is different from reinstating the loan. To redeem the vehicle, you’ll need to pay the following within 15 days of getting the repossession notice:

• The remainder of the amount due on the loan,

• All late charges that are allowed by law, and

• Any other amount the lender is able to collect under the terms of your loan contract.

If you redeem the vehicle after 15 days from the repossession notice, you'll have to pay the same amount you would have had to pay before 15 days plus, you'll have to pay the costs of repossessing, repairing, and storing the vehicle.

You may also be able to get your car back or avoid repossession by filing for bankruptcy. A Pennsylvania attorney can look at your case and help you understand if this is a good option for you. If you can get your car back through a Chapter 13 bankruptcy, you'll be able to make some changes to the terms of your loan contract that will make your monthly loan payments easier to afford. 

Where Can I Find More Information About Repossession Laws in Pennsylvania?

• Repossessions Information From PALawHELP.org

• Pennsylvania Self-Help Legal Information

• Free Legal Answers for Pennsylvanians from the American Bar Association

• Pennsylvania Legal Aid Network Providers in PA

• Pro Bono Services from the Pennsylvania Bar Association