LEGAL DISCLAIMER: This article is for informational purposes only and should not be considered legal advice. We are only providing a high-level overview of what you can expect if you are facing a vehicle repossession in Montana. If you need legal advice regarding the specific vehicle repossession laws in Montana and your rights, you need to talk to an attorney!
For many Montanans, owning a car or truck is a necessity. With vast open spaces and limited public transportation options in many towns, having reliable transportation is essential. The fear of repossession can be a very real and stressful experience for borrowers that fall behind on their auto loan payments.
When a borrower defaults on their loan, however, a lender has the legal right to hire a repo company like us to repossess the vehicle. We know that repossession isn’t a fun topic for anyone so in this article we’ll take a closer look at Montana’s repossession laws and provide tips for borrowers to hopefully help them avoid repossession in the first place.
What is Vehicle Repossession?
When you take out a loan for a car or truck, you typically use the vehicle as collateral for the loan. If you fall behind on your loan payments and can’t get caught up on them, you’ll be at a high risk of facing repossession.
There are two types of vehicle repossession. There is voluntary repossession and involuntary repossession. Voluntary repossession is when a borrower chooses to surrender their collateral (i.e. the vehicle) to the lender instead of having the lender repossess it. When a lender initiates the repossession, it’s an involuntary repossession. This article will focus primarily on involuntary repossession of vehicles.
Vehicle Repossession Laws in Montana: What Borrowers Need to Know
Vehicle repossession is a serious matter, and it’s important to understand how it works in Montana. According to the vehicle repossession laws in Montana, if you fall behind on your loan payments, the lender can repossess the vehicle to recover as much of the value of the loan as they can. While most lenders won’t start the repossession process after just one late loan payment, they can if they want!
Montana repossession laws also don’t require lenders to provide borrowers with a notice of repossession, so if you’re late on a loan payment, you’ll want to review your loan agreement or call your lender to find out when you might be at risk of repossession.
Court orders also aren’t required in Montana to repossess a vehicle unless the vehicle is on one of the many Native American reservations in Montana. Repo companies in Montana cannot repossess vehicles physically located on reservations without a court order. As soon as a vehicle leaves a reservation, however, a repo company can repossess it without a court order. A repo company can enter into the reservation and repossess a vehicle without a court order as long as they have permission to do so from the vehicle owner. This usually occurs during voluntary repossession.
Montana repossession laws also prohibit a repossession company from repossessing vehicles that are in the borrower’s garage or behind a locked fence or enclosure without a court order. A vehicle is fair game for repossession without a court order, however, if it’s parked outside of any closed space (i.e. your unfenced yard, driveway, a parking lot at your place of work, at a grocery store, etc.).
If a borrower has personal belongings in the vehicle when it is repossessed, a repo company is required to give them back to the borrower, but the repo company can charge a fee to store those personal belongings until they are picked up by the borrower. If the borrower is present when we repossess the vehicle, we’ll ask the borrower to remove their personal belongings. If the borrower isn’t present, we’ll notify the borrower that there are personal belongings in the vehicle they need to pick up at our office. We don’t charge any fees to store personal belongings unless we have to secure them for more than two weeks. After two weeks we charge daily storage fees.
Finally, Montana repossession laws provide for redemption rights, which allow borrowers to reclaim their vehicle before it is sold by the lender. Typically, borrowers must pay off the outstanding loan, plus any additional fees and expenses related to the repossession to reclaim the vehicle.
What You’ll Owe After a Vehicle Repossession in Montana
If you’re going through repossession, you’re probably wondering if you’ll owe anything after it is completed. In most cases, you can expect to owe something but it will depend on how much the lender gets from the sale of your vehicle and how much your loan was on that vehicle.
Consider this scenario: A lender hires us to involuntary repossess a vehicle that has a loan of $15,000 on it. We charged the lender $X to do the repossession and we took the vehicle to auction for the lender so the lender could sell it. The lender gets $10,000 for the vehicle at auction. The balance due to the lender is $15,000 plus the repossession costs, but the lender only received $10,000 at auction. That leaves a balance due to the lender of $5,000 plus the repossession costs. Because the amount received is less than the amount owed, it is called a “deficiency balance.”
Lenders can pursue legal action to collect the balance due, potentially garnishing wages or seizing funds from the borrower’s bank account. Furthermore, they may also seek reimbursement for additional costs like court fees and attorney fees through a judgment.
Often times the deficiency balance can be reduced through a voluntary repossession because the fees we charge a lender for a voluntary repossession is lower than an involuntary repossession. Neither type of repossession, however, will affect the amount the borrower owes on the car loan.
It doesn’t happen very often but sometimes the lender may get more money at auction than what is owed to them. In the example above, if the lender received $17,000 at auction, there would have been a surplus balance of $2,000 (less the repossession costs). When there is a surplus balance, the lender is legally obligated to reimburse the borrower the surplus amount after the loan and repossession costs are paid for.
How a Vehicle Repossession Can Affect Your Credit
Vehicle repossession will affect a borrower’s credit score, and the repossession will remain a credit report for seven years. The negative impact on a borrower’s credit can be limited to a degree through voluntary repossession.
How Bankruptcy Can Affect Vehicle Repossession in Montana
Filing for bankruptcy can have a significant impact on vehicle repossession in Montana. Depending on the type of bankruptcy filed, a borrower may be able to stop the repossession or discharge the debt associated with the repossessed vehicle. It’s important to consult with a bankruptcy attorney to understand the options and the potential consequences of filing for bankruptcy.
Common Vehicle Repossession Issues and Questions for Borrowers
While repossession laws in Montana are designed to protect both lenders and borrowers, disputes and issues can arise.
If a borrower believes that their vehicle was repossessed unfairly or without following proper legal procedures, they have the right to dispute the repossession. They can request a hearing to challenge the repossession, and if the hearing officer finds in their favor, the lender may be required to return the vehicle or provide compensation.
If a vehicle has already been repossessed, a borrower may be able to get it back through redemption. As mentioned earlier, the car loan will need to be paid in full, plus any additional fees and expenses related to the repossession, in order to reclaim the vehicle. If a borrower can’t afford to redeem the vehicle, a borrower may be able to negotiate with the lender to set up a payment plan or find other solutions.
Whether a borrower needs to dispute a repossession, or redeem a vehicle after repossession, it’s important for a borrower to understand their rights and obligations under Montana law. Seeking legal advice or representation is highly recommended!
Vehicle repossession can be a stressful and difficult experience for borrowers in Montana. However, by understanding the repossession laws in Montana, borrowers can be armed with the information they need to better navigate the process. The information we’ve provided here is by no means all the ins and outs of Montana vehicle repossession laws. What we’ve provided here is a very general overview of the laws. We encourage borrowers to seek legal advice or legal representation to fully understand all the details of vehicle repossession laws in Montana if they are facing repossession.
As an experienced repossession company in Montana, we work with lenders throughout Montana, Wyoming, and the entire Pacific Northwest to facilitate involuntary repossessions. Contact us to learn more about our services and how we can help!
