Repossession is the process of taking back a car after the owner defaults on their auto loan. Each state has different laws and regulations that dictate every step of the repossession process from start to finish. This page will provide an overview of South Carolina's Repossession Laws and what you should know if you've fallen behind on car payments.
Written by Upsolve Team.
Updated January 4, 2022
If you have an auto loan and you let your car insurance lapse or you fall behind on your monthly payments, your lender can repossess your car. Repossession is when your lender takes back the collateral — in this case, the car — for a loan. The lender has the legal right to do this because the car loan is secured by the vehicle (the collateral).
This article focuses on auto repossessions. In South Carolina, lenders can repossess your car if you violate any of the terms of your auto loan agreement. You're lucky to live in South Carolina because it has some of the best consumer protection laws in the country when it comes to repossessions. This article explains how repossession works in South Carolina, including what notice borrowers get before a repossession, what repo companies are allowed to do, and how borrowers can get their cars back.
How Many Payments Can I Miss Without Risking a Repossession in South Carolina?
With a couple of exceptions, you can't have your car repossessed until your loan is at least 30 days in default. Your loan contract will explain exactly what constitutes a default. Your loan can be in default as little as one day after you miss a loan payment.
Will I Be Notified Before the Repossession? How?
Under South Carolina law, the lender (also called a lienholder) must send you a Notice of Right to Cure before it can repossess your car. The lender can deliver this notice to you in person or mail it to you. The lender can’t send the notice until you've been in default for 10 days. The notice gives you 20 days to catch up on your missed payments. If you fail to catch up, then the creditor can repossess your car.
There are two important exceptions to this notice requirement:
This repossession law doesn't apply to credit unions. If your car loan is with a credit union, your lender can repossess your vehicle without notice.
You only have the right to receive this notice once per loan. If you go into default a second time on the same loan, the lender can repossess quickly without notice.
How Can I Prevent a Repossession?
If you know you're going to have difficulty making a payment, it's a good idea to contact your lender and see if they can work with you. They may have solutions to help you get back on track. You can do this during the 20-day deadline to catch up on your payments after you receive notice of repossession, but it’s even better to do it before then. Remember that you only have a right to receive a notice of default if your creditor isn't a credit union and you haven't used it before on the same loan.
If the lienholder fails to send the required notice, you may be able to use this to get your repossessed car back. This could also be a defense if the lender tries to get a court order for repossession.
What Can Repo Companies in South Carolina Do?
In South Carolina, a repo company can't commit a breach of the peace when trying to repossess your car. This means they can't repossess your motor vehicle from your closed garage or from behind a locked gate. But they're free to repossess from almost anywhere else. They can repossess your vehicle from your driveway, your work parking lot, or at a shopping center. If you keep your car locked in a garage, the repossession company can get a court order that requires you to turn the car over.
It's also a breach of the peace if you catch the repo company in the act of repossessing your car and you tell them to stop, but they continue with the repossession. While you can object, you can't force them to stop. You aren't allowed to breach the peace either. If the repo agent breaches the peace, you can use this information in court to try to get your car back.
What About the Personal Property in My Car?
If you had personal items in your car when it was repossessed, you have the right to get them back. The repossession company must set a time for you to come and retrieve your things. You probably won't be able to get anything back that has become part of the car. For example, if you installed a car stereo, it's now part of the car and you're not going to get it back. You don't have to sign anything releasing the repo company from liability when you're retrieving your things.
If you have trouble with the repo company allowing you to get your things back, contact the lender. The lender doesn't want to be held liable for a wrong committed by the repossession agents. If there's something you know was in the car at the time of repossession and it's not there when you're retrieving your things, it's time to contact an attorney.
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What Happens After a Repossession in South Carolina?
The lender has to send you two more notices after the repossession. They need to send a notice of your right to redeem the car and a notice of what they intend to do with the collateral. These notices can be combined into one letter.
The right to redeem means you can get your car back if you pay off the whole loan balance. You must redeem the vehicle before the lender sells it. The lender may agree to give the car back if you pay enough to catch up on the loan plus the costs of collection, but it’s not required. In the written notice of what they intend to do with the collateral, the lender must state if it intends to sell the collateral or keep it as satisfaction for the debt.
If the lender intends to sell the motor vehicle, it must say whether it will be sold at a private sale or a public auction. If the vehicle will be sold at a public auction, the notice must state the date, time, and place of the auction. If the car will be sold in a private sale, the notice will state the date after which the vehicle will be available for sale. You should get these notices at least 10 days before the sale occurs.
South Carolina's version of the Uniform Commercial Code (UCC) requires all aspects of the sale to be commercially reasonable. The sale of the collateral is considered to be commercially reasonable if:
The sale occurs in the usual manner for the sale of repossessed vehicles,
The price is competitive with the values of other vehicles of the same type at the time of the sale, or
The sale conforms with reasonable commercial practices among lenders selling repossessed automobiles.
Ensuring that a sale is commercially reasonable is important since the sale price will determine if you'll receive a surplus payment or be liable for a deficiency balance.
Regardless of what the lienholder (your lender holds the lien) wants to do, if you’ve paid 60% of the original loan amount, you can force the lender to sell the vehicle within 90 days of the vehicle repossession. This rule exists because you’ve paid so much for the vehicle that there’s a good chance the sale will bring a surplus. You have a right to this money.
Do I Still Owe After a Repossession in South Carolina?
The proceeds from the sale or auction of the car will first go toward any cost the lender incurred to repossess the vehicle. This includes, towing, storing, and preparing the car for sale. The remaining proceeds will be applied to your outstanding loan balance. Often, the sale proceeds won't be enough to pay the loan balance plus the costs of repossession. In these cases, you'll owe the lender a deficiency balance. This is more likely to happen if you’re already upside-down on the loan.
For example, if you had a balance of $10,000 and the costs of repossession were $2,000, you would owe the lender $12,000 minus the sale proceeds. If the proceeds of the sale were only $8,000, you have a $4,000 deficiency. That’s the $12,000 you owed minus the $8,000 sale proceeds. If you know your car is going to be repossessed, you can choose to voluntarily return it, which allows you to avoid having to pay the repossession costs. If you’d voluntarily surrendered the vehicle in this example, your deficiency would’ve been $2,000 instead of $4,000.
In some cases, there will be money left over after the car is sold and the proceeds are used to repay repo costs and the loan balance. If the proceeds from the sale in the previous example were $14,000, there would be a $2,000 surplus. The lender owes you this surplus.
Can I Get My Car Back After a Repossession in South Carolina?
In South Carolina, you have a right to redeem the vehicle if you do it before the vehicle is sold. With a public auction, this gives you about 10 days. If the lender is going to conduct a private sale, you'll have more time since it will only be on the car lot after 10 days. It's not likely to sell on the first day. To redeem the vehicle, you'll have to pay the entire amount due on the loan plus the costs of collections and repossession. Another way to get your car back would be to go to the auto auction. You can bring bidders with you. Maybe you have a family member or friend who will buy the car and let you make car payments to them.
Another way to get your vehicle back is by filing bankruptcy. If you think this might be a good option for you, seek legal advice from a South Carolina bankruptcy attorney as quickly as possible. You must file your bankruptcy before the sale. You may be able to file a Chapter 13 bankruptcy case that would alter your car loan to make the payments more affordable.