Repossession Laws in Washington

You need a car to get around in most of Washington. If you get behind on your car payments, your lender can repossess your car, which leaves you without a way to get around. Your lender has a right to do this if you violate the terms of your loan agreement because your car is collateral for the loan. Most repossessions happen when borrowers get behind on their loan payments, but your car can also be repossessed if you've let your insurance lapse. This article answers many of the questions you may have about Washington repossessions.

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

In Washington, a borrower can have their car repossessed when they're a day late on making their payment if that qualifies as a default under their loan agreement. It's rare to have such an aggressive lender or lienholder, but it's possible. You can look at your loan agreement to see what the terms of default are for your particular auto loan.

Will I Be Notified Before the Repossession? How?

In Washington, you may not get any notice of a vehicle repossession until after it's happened. After the car repossession, you'll only receive a notice that you have a right to redeem the vehicle along with what the creditor intends to do with the vehicle. 

How Can I Prevent a Repossession?

If you have a reputable lender, it's a good idea to contact the creditor as soon as you know you'll have to make a late payment. The lender may have solutions that can help you stay on track. You may even be able to work out better loan terms.

If you have an aggressive lender, you may have to do the best you can to stay up to date on your payments. It's a good idea to start looking for a better lender if this is the case. You may be able to refinance your car loan even if you don't have the best credit. Almost everyone faces financial challenges at times. You need a lender that will work with you through difficult times.

What Can Repo Companies in Washington Do?

Washington law forbids a repo company from committing a breach of the peace when it tries to repossess your car. This means repo agents can't take your car from your garage or from behind a fence at your house. But they can take your car from your driveway or from a parking lot. 

If you catch the repo man in the act of repossession and tell them to stop, they should stop. If they continue with the repossession, that's also a breach of the peace. Don't try to force them to stop. If you do, you'll have breached the peace and could even have criminal charges brought against you.  

If you try to keep the car from the repo company, they can get a court order to get your car, but they can't breach the peace. If they don't do a Washington repossession by the letter of the law, you'll have the upper hand. You may be able to use their breach in court as a defense against the repossession.

What About the Personal Property in My Car?

State law requires the repo company to set a time for you to come and get your personal property. It's a good idea to send a written demand for your personal property immediately, listing what was in the car when it was repossessed. If you have trouble getting your things from the repossession company, call the lender. You may be able to hold both the lender and the repo company liable in court if you don't get your things back. 

It's a good idea to call a Washington law office before making any decisions about legal cases. Also, you can file a complaint against the lender with the Washington State Department of Financial Institutions. 

What Happens After a Repossession in Washington?

After the lender repossesses your vehicle, the lender is required to send you a written notice. The lender must usually wait at least 10 days after sending you the notice to sell the car. The written notice must tell you:

• That you have a right to redeem the car.

• What the lender intends to do with the car — keep it as full satisfaction of the debt or sell it at a public auction or private sale.

• The time and place of the public auction, if the lender chooses to sell the car. Or the date after which the vehicle will be available for private sale. 

If you've paid more than 60% of the car loan, the lender must sell the vehicle within 90 days of repossessing it to protect your right to a surplus. That is when the car sale brings in enough money to cover the debt you owe as well as repo fees and there’s money left over. If you’ve paid 60% of the loan or more, there's a much higher chance of you having a surplus. 

If you've paid less than 60% of the loan amount and the lender wants to keep the car as satisfaction for the debt, you have 21 days from the date of the lender's notice to demand, in writing, that the lender sells the vehicle.

Every aspect of the sale of the car must be commercially reasonable. This means it can't sell for an unreasonably low price. This is important because the sale proceeds determine if you're going to owe a deficiency balance or if the lender will owe you a surplus.

Do I Still Owe After a Repossession in Washington?

Often, repossessed vehicles don’t bring in enough money at the sale to cover what the borrower owes. This is especially true if you were already upside-down on your loan, meaning you owed more than the car is worth. The amount you’ll owe includes your full loan balance plus repossession costs. For example, if you owe $12,000 for the car and the costs of repossession were $1,000, you owe $13,000. If the car only sells for $9,000 at the auction, you’re left with a $4,000 deficiency balance — the $13,000 you owe minus the $9,000 sale proceeds. 

You can decrease this deficiency through a voluntary repossession. This is when you voluntarily turn in the vehicle prior to it being repossessed. In this example, if you’d voluntarily surrendered the car, you wouldn't have the $1,000 in repossession costs so your deficiency balance would be only $3,000. 

Often, if there's a deficiency balance, the lienholder will sue you to ensure that you pay it. They do this by getting a court order called a deficiency judgment. Once the lender has a judgment, they can use serious debt collection tools like wage garnishments and bank account seizures to collect the deficiency. 

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

Washington repossession laws allow you to get your car back before it's sold through a process called redemption. If the lender decides to keep the vehicle as satisfaction of the debt, you have up to 21 days to redeem the car after they send the notice of their intent.

To redeem your vehicle, the Revised Code of Washington (RCW) says you'll need to pay the full balance of the loan (not just the past-due payments) plus the costs of the repossession. This is very difficult, but you may be able to find another lender to loan you the money to redeem the car.

Another way to get your car back in Washington is to file for bankruptcy. If you file a Chapter 13 bankruptcy, your car payments will be paid through the plan and will probably be much more affordable. You'll have to file before the car is sold to get it back. It's a good idea to check with a bankruptcy attorney to see if it's still possible to get a repossessed car back with bankruptcy. 

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

The following links could be helpful if you’re facing repossession:

• The Washington State Office of the Attorney General has information on the repossession process in Washington.

• WashingtonLawHelp.org has useful information about Washington’s repossession law.

• The Washington Courts provide several Self Help Resources.

• Find Legal Help from the Washington State Bar Association.