August 31, 2020
With the current high unemployment rate in Nevada, many individuals are concerned about how to keep a roof over their head and put food on the table. Other looming concerns include how to manage car payments, payday and title loans, and credit card debt. For many Nevadans, the amount of past due bills continues to grow.
Next to a home, purchasing a car is often the biggest purchase an individual makes. While the federal government and the State of Nevada put in place protections against eviction and foreclosure, auto debt and repossession largely went unaddressed*. If you have missed car payments, you should know what steps need to be taken before and after a lawful repossession.
In Nevada, the car sale contract, which is a form that is required by law, has some preliminary protections built in. First, the contract must state that the lender cannot charge a late fee until the payment is more than 10 days late. Additionally, the amount of the late fee is limited to 8% of the payment amount or $15, whichever is less. For example, if your payment is $150 then the most the late fee can be is $12.
Second, the contract states that you are not in default for non-payment until you are 30 days late. This means, even if you are behind, if you make the payment before you are 30 days late and pay any applicable late fee, the lender cannot repossess your vehicle for non-payment.
Negotiating with the Lender
If you cannot make your car payment within the 30-day window, you should contact your lender. Ask if the lender is offering any type of assistance program. The lender might offer payment deferment or something similar.
When discussing options with your lender, make sure you understand the terms. Good questions to ask are 1) when is the payment going to be due again; 2) will the change increase the amount of time you will have to pay (extend the term of the loan); and 3) will you have to pay additional interest. Be sure to ask the lender to provide you with the terms in writing.
Additionally, if the lender is asking you to sign a new document(s), make sure you read and fully understand what you are signing before you sign it. If you do not read or write English, ask for the document(s) in Spanish. If you do not understand the terms, seek assistance from an attorney or someone you trust (but not the lender).
During the repossession there are certain rules the tow company must follow. They cannot “breach the peace” while taking back the vehicle. For example, the repossession company is prohibited from breaking into a garage, fence, or gate to retrieve the vehicle.
The tow truck driver is not allowed to touch or threaten you to access the car. If you are present for the repossession, consider (safely) recording the event for documentation purposes. If you are threatened or hurt in the process, call the police.
If you purchased your vehicle in Nevada and the vehicle was located in Nevada when the lender repossessed it, ask yourself these preliminary questions 1) was I more than 30-days late with a payment; and 2) was the vehicle repossessed after the stay at home order and the order closing non-essential businesses were lifted?
If you answered yes to both questions, there is a good chance that the lender had the legal authority to repossess the vehicle. However, if you feel that the lender did something wrong, please seek legal assistance. If you answered no to either question, it is important to seek legal assistance.
Once the lender repossesses a vehicle, there are numerous laws the lender must follow. First, the lender must send the buyer and co-buyer a notice informing them of the lender’s intent to dispose of the repossessed vehicle. This notice must have specific language and, in Nevada, must be sent within 60 days of the date of the repossession.
It is a good idea to have an attorney who is familiar with repossession notice requirements review the notice to ensure compliance. An improper notice not only gives you a possible defense to any deficiency that you might owe, but it gives you an affirmative claim against the lender.
If You Are Sued
If you are sued for an auto deficiency (the amount you still owe on the vehicle after the repossession and subsequent sale), you should immediately seek legal assistance. There are also a few things you can determine yourself.
First, and probably most importantly, are you being sued more than 4 years after you defaulted on the contract? If yes, then you likely have a total defense to the debt. Additionally, you may have a claim against the entity suing you, especially if it is a debt collector.
Think back to the notice you received: Did it meet the statutory requirements? If it did not, you may have a claim against the entity suing you and you can file a counterclaim. Bottom line is – if you are being sued, it is best to involve an attorney to help you navigate the process.
Where to Get Help
If you believe you have a legal claim or defense, visit www.lacsn.org to find out if you are eligible for services. If you do not qualify for legal aid services, seek out a private attorney familiar with car repossessions and auto deficiency lawsuits. Contact the State Bar of Nevada Lawyer Referral Service at 702-382-0504 or visit https://www.consumeradvocates.org/find-an-attorney.
* If you are not in Nevada, your state may offer protections not discussed here. This information only applies to vehicle sales, not leases.
Paul Padda Law is a proud sponsor of the Legal Aid Center of Southern Nevada’s Community Justice Fellowship.
Sophia A. Romero, Esq.
Attorney, Consumer Rights Project
Legal Aid Center of Southern Nevada, Inc.