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Michigan Laws on Car Repossession and ways to Stop!

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Michigan Laws on Car Repossession and ways to Stop!

According to an Experian study published in March this year, car loans in America had hit a cumulative total of about 1.3 trillion as of 2019. The numbers are expected to surge this year, mostly due to the Covid-19 pandemic. Of this total, most are still struggling with repayments, with others unable to clear the loan. In Michigan State, the law clarifies what actions and steps to be taken for credit defaulters. The law tends to balance the creditor and debtor, and in most circumstances, the debtor losses possession of the collateral.

However, the law in Michigan opens a window for negotiation through the famous chapter 13 plan. With the right attorney, you can negotiate a deal to help you keep the car and, in some instances, reduce your other loans and bills. In the article below, we will discuss this formula’s details and different ways to stop your vehicle from creditor’s repossession.

Car Repossession in Michigan

Your car is open for repossession in Michigan if you breach your agreement with your creditor or bank. The laws here allow for self-help repossession, meaning a lender can reclaim your car even without prior court orders. However, the law provides guidelines and limitations to bind the reclamation process. These include;

  • The repossession process should be peaceful and consented by both parties, with no rudeness or threats. More so, the vehicle should be auctioned slowly without disturbance or dramatic scenes.
  • The repo agent shouldn’t get the car from inside a structure, such as garage-even, if it is open unless authorized by the owner.
  • The repo agent should not trick you into accessing your car, probably by luring you to know where the vehicle is or putting you under duress to give them your car keys.
  • You have a right to know your asset’s buyer to allow you to know its value in the auction market and see if it passes your defaulted total.

Two Repossession procedures in Michigan.

You can opt for a voluntary or involuntary repossession of your car, depending on your preference. With the former, you should make formal arrangements to voluntarily surrender the collateral asset to the lender without a Repo agency intervention. On the other hand, the involuntary repossession occurs when you default payment and still don’t surrender the asset. In such a case, the lending company hires a third-party agency’s services to repossess the asset.

The two processes have a significant impact on your credit history. But with the voluntary has the upper hand since you get a negotiation window with the creditor; hence chances of reaching a consensus are higher.

Michigan Laws on Car Repossession

The creditor should issue a 15 days’ notice to all debtors, notifying them of their right to retrieve the car. Within this period, you can get your vehicle back if you pay the loan in total or hire a qualified bankruptcy Attorney to renegotiate the terms.

You are entitled to any personal belongings inside the car at the time of repossession. If the repo company accidentally carries them, they must inform you immediately and provide a collection window. However, if you default collection, they should store it up for you but at an extra fee.

If you default all notices, the lender is allowed to place the repossessed car on auction. After it sells, the lender sends you a second notice notifying you of your car’s proceeds from the action. Often the vehicle sells at low rates, hence in most cases, you will have a deficit. You get a notice of your balance from the lender, who then starts repossessing the remaining balance.

Strategies to Reduce your Car Loan Repayment Balance

Although the law requires you to surrender the car on defaulting the loan terms, some caps can allow you to change the loan terms and, in some instances, even slash the loan by huge margins. However, to crack these clauses, you require a professional attorney’s input to guide you through and detect any breach of the law and recommend reasonable solutions to substantiate a reduction. The two main strategies you can apply are;

Application of a Chapter 13 Plan

This law is only for loaners who have possessed the car for more than 910 days, equivalent to 2 ½ years. The plan tends to cut down on the general interest generated and the cumulative total of the loan. Your car value is matched to the current market value, and the remaining balance immediately converted to unsecured debt.

Benefits of Filing a chapter 13 Plan

Consolidates and attempts to reduce all your unsecured debts, including medical bills, Credit cards, loans, and loan deficiencies, to match your income and budget. And depending on your repayment commitment within the 60 months provided, then they can be withdrawn altogether.

If well negotiated, you can as well withdraw any other mortgage you may have, including a rental mortgage.

You get the freedom to pay your loan as per your potential and still foot your monthly bills since the terms are lighter, and the repayment window is increased.

You get legal protection for your vehicle and any other creditor who attempts to auction your property.

Rebuilding your credit history- Failure to pay your car loan can negatively influence your credit score. However, FICO analysis shows that the successful application of the Chapter 13 plan can improve your credit score by 65p. This is achieved because, paying down your principal debt, fortifies your debt to income ratio.

Reducing other bills by combining some- Using the Chapter 13 plan, an experienced Attorney can as well devise a formula to consolidate other debts to meet your current payment plan. A perfect repayment plan from the procedure may look as follows;

The idea of losing your day to day ride to a repo company can be frustrating. You not only lose the convenience of maneuverability but also widely taint your credit history. If you are stuck with such a case, all hope isn’t lost. At Frego& Associates, we boast of a team of professional car repossession lawyers with tremendous experience in the car repossession law. You can reach us today through our Phone number 800-646-0075 and talk to an expert.

 

 

 

 

 

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