Quick answer
After repossessing a car, a California lender must send a Notice of Intent to sell at least 15 days before selling it, within 60 days of the repossession. That notice must explain your right to redeem the car, and usually to reinstate the contract by catching up. If the notice is missing or defective, the lender generally can't collect a deficiency balance from you.
Key takeaways
- A lender can't repossess unless you're in default on the contract. Filing bankruptcy alone isn't a default.
- After repossession, you're entitled to a written Notice of Intent at least 15 days before the car is sold (20 if mailed from or to out of state).
- You can usually reinstate the contract by catching up, or redeem the car by paying it off.
- You can ask in writing for an extra 10 days to redeem or reinstate.
- If the notice isn't given within 60 days or is missing required information, you generally aren't liable for a deficiency.
When a lender can repossess
Under California's Automobile Sales Finance Act (the Rees-Levering Act), a lender can't repossess your car or demand the full balance unless you're in default. Filing for bankruptcy, by itself, is not a default, and a contract term saying otherwise is void (Civil Code § 2983.3(a)).
The Notice of Intent to sell
After repossession, the lender must give everyone liable on the contract at least 15 days' written notice before selling the car (Civil Code § 2983.2). The notice must:
- Explain your right to redeem the car by paying the full balance, with an itemized breakdown of the balance and any repossession costs.
- Say whether you have a right to reinstate the contract (catch up on what's past due) and what the conditions are, or explain why you don't.
- Tell you that you can get an extra 10 days to redeem or reinstate by asking in writing, and include the form to do it.
- Say where the car will be returned and where to send payment.
- Explain that you can request a written accounting of the sale, and warn that you may owe a deficiency.
Your right to reinstate
In most cases you can reinstate the contract by paying what's past due plus allowed costs, and get the car back on the original terms. The lender can deny reinstatement only in limited situations, such as material lies on the credit application, hiding the car or taking it out of state to avoid repossession, or damaging the car.
Deficiency balances
If the car sells for less than you owe, the lender may sue for the difference. But you're liable for a deficiency only if the lender sent a proper notice within 60 days of the repossession. A late or defective notice is one of the most common reasons a deficiency claim fails. You can also request a written accounting of the sale within one year.
What to do next
- Keep the Notice of Intent and the envelope it came in, so the date it was mailed is clear.
- Check the notice for every required item listed above.
- If you want the car back, send a written request for the 10-day extension before the deadline.
- Ask the repossession company for the personal belongings that were in the car.
- Request a free case review, especially if you're being asked to pay a deficiency.
Frequently asked questions
Sources
- California Civil Code § 2983.2 (notice of intent and deficiency)
- California Civil Code § 2983.3 (default, reinstatement)
This website provides general information, not legal advice. Laws change and every situation is different. Talk to a licensed attorney in your state about your specific facts.
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