Repossession Laws in Tennessee

Finding your car missing is one of the worst feelings in the world. If you get behind on your car payments, you risk having your car repossessed, which means your car could disappear unexpectedly. In Tennessee, it's easy to figure out what happened with one phone call to the police. Repossession agents are required to notify the police when they repossess in Tennessee. 

Lenders are allowed to repossess or take back your car if you violate your loan agreement. You could do this by letting the insurance lapse, but most often, repossessions happen when you fall behind on your car payments. Since car loans are secured loans, the car acts as collateral. This means if you don’t follow the terms of the loan contract, the lender can repossess your car and sell it.

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

In Tennessee, missing even a single payment puts you at risk of having your car repossessed. Most lenders will wait longer, but it's important to realize that being a day late is enough to lose your car. You can look at your auto loan contract to see how your lender handles default and repossession.

Will I Be Notified Before the Repossession? How?

The Tennessee code doesn't require the lender to give you any notice before the repossession. You’ll get a notice after the repossession that tells you what the lienholder (the lender) intends to do with the collateral (your car) and explains your rights.

How Can I Prevent a Repossession?

If you have a reputable lender and you know you're going to have trouble making a payment, it's a good idea to contact the lender. Explain what the problem is and see if they have a solution. Often, if you do this, they'll work with you.

Not all lenders are reputable. Some have predatory practices, charge high interest, and don’t give much time before repossessing. You can check your lender’s reputation by looking at the Better Business Bureau or the Tennessee Attorney General's office. If you have a bad lender, do your best to catch up, but also look into refinancing with a better lender. You need to have a lender that will work with you through the tough times. Almost everyone experiences financial challenges at some point in their lives.

What Can Repo Companies in Tennessee Do?

In Tennessee, a repo man can’t breach the peace during the vehicle repossession process. That means they can't take the car from a locked garage or from behind a locked gate. On the other hand, they can take your car from your driveway, from a parking lot, or from the street. 

In Tennessee, repossession agents also can't continue with the repossession if a borrower catches them in the act and objects to the repossession. That's also a breach of the peace. But, you can't use force to stop them. If you do, you'll have breached the peace and could face criminal charges. 

Whenever a repossession can't be carried out without a breach of the peace, the repo agents can get a court order. With a court order, you'll have to let them take the car.

What About the Personal Property in My Car?

You have a right to any personal property you had in the repossessed vehicle. For example, if you left your wallet, purse, phone, or any other item in the car, you have a right to get it back. You need to contact the repossession company immediately to get your personal items back. The repo company should set a time and date for you to come and get your things. 

You have up to 14 days from the date of the vehicle repossession to get your things back. During these 14 days, the repo company can't charge a storage fee. After 14 days, the repossession company is free to do whatever it wants with your personal property.

What Happens After a Repossession in Tennessee?

At least 10 days before the sale of your motor vehicle, you'll receive your notice outlining what the lender intends to do with the repossessed car and explaining that you have a right to redeem it. The Tennessee code allows the lender to send this letter as soon as you default, but this almost never happens. The lienholder doesn't want to tip you off to the auto repossession. You'll usually get this letter the day after the repossession.

The Tennessee code requires this letter to explain the following:

• How the lender intends to dispose of the repossessed car. It may choose to sell the motor vehicle or keep it as satisfaction of the debt. If the lender intends to sell the motor vehicle, it has to tell you if it will be sold at a public auction or a private sale.

• If the car will be sold at a public auction, it needs to tell you the date, time, and place of the sale.

• If the car will be sold in a private sale, it needs to tell you the date after which the motor vehicle will be sold.

• Who you can call (and the phone number) to learn how much you need to pay to redeem the motor vehicle.

• Who you can contact to get additional details about the sale of the car. The lender must include a phone number or mailing address in this contact information.

Tennessee's version of the Uniform Commerical Code (UCC) requires every aspect of the sale, including the sale price, to be commercially reasonable. That means everything from the advertising to the execution of the sale must be handle fairly and within commercially acceptable practices.

Do I Still Owe After a Repossession in Tennessee?

Just because your lender takes your car doesn't mean you don't still owe money. If the lender sells the car and the sale proceeds aren’t enough to cover your loan balance plus any costs of the auto repossession and other collection expenses, you'll have a deficiency balance. This is even more likely to happen if you were already upside-down on the car loan, meaning you owed more than the car is worth.

For example, let’s say your car loan balance was $15,000 and the repossession cost the lender $1,000. This means you owe $16,000 minus whatever your car sold for. If the auction sale price was $11,000, you'll have a $5,000 deficiency balance. That’s the $16,000 you owed minus the $11,000 the car netted at auction.

One way to reduce this deficiency is by doing a voluntary repossession. This means you voluntarily surrender the vehicle to the lender or dealership. In this example, it would’ve saved you $1,000 in repossession costs and reduced the deficiency balance to $4,000. 

Often, if there’s a deficiency balance, the lender will sue you to collect it. If they get a deficiency judgment, they can use collection tools like a wage garnishment or bank account seizure. Less commonly, there may be a surplus. Using the example above, if the repossessed car sold for $17,000 at the repossession sale, the lender would owe you the $1,000 surplus.

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

The Tennessee code says you can get the car back after repossession if you redeem it before it's sold. Under Tennessee law, you have to pay the full amount due on the loan to redeem the vehicle, not just the past-due amount. You also have to pay the costs of repossession and any other collection fees. You only have about 10 days to get this money together. You might be able to find another lender that’s willing to give you a loan so you can redeem the vehicle. 

Sometimes, you can use bankruptcy to get your car back after a repossession. Take advantage of a free consultation with a Tennessee bankruptcy attorney to see if this will work for you. If you file a Chapter 13 bankruptcy, it can make your car payments more affordable. 

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

The following links provide helpful information if you're facing repossession in Tennessee:

• Information on How Used Car Buyers Can Protect Their Legal Rights from the Legal Aid Society of Middle Tennessee and the Cumberlands

• Tennessee Legal Aid Services from the Tennessee Department of Human Services

• Legal Aid/Legal Services in Tennessee from the Tennessee Bar Association