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Florida Repossession Laws: Car Repossession in Florida

Car loans are secured debts. This means that if you fall behind on your payments, your lender may take your vehicle away. If you are struggling to cover your auto loan debt balance, you may wonder what the repossession laws in Florida are and how they may affect you.  

Therefore, in this article, you will find key information about how the repossession process works in Florida and how filing for bankruptcy may help you keep your car while dealing with your debts. An experienced bankruptcy lawyer can help determine if bankruptcy is a suitable remedy for your financial situation. 

Car repossession is no joke. In fact, recent statistics estimate that for every 2.4 cars sold, 1 existing vehicle is repossessed every year. At Z. Hernandez Law, we strive to help clients get the fresh financial start they need. To do so, we are committed to protecting and fighting for your property. Contact us today to see how we may be able to help with the tools provided by Florida’s bankruptcy laws.

What Are the Repossession Laws in Florida?

In Florida, repossession is the seizure of property that people fail to pay. In other words, repossession is a debt collection action that allows lenders to recover the property acting as  collateral for the loan. 

Because most people use a loan to finance their vehicles, repossession is commonly associated with cars. However, according to Florida repossession laws, this collection action can be applied to any vehicle used as a means of transportation. 

Examples of vehicles that can be repossessed include, but are not limited to:

  • Cars
  • Motorcycles 
  • Mobile homes
  • Trucks
  • Trailers and semi trailers
  • Truck tractors 

Under Florida law, a title loan agreement must include the debtor’s payment schedule, among other information. Failing to make these payments on your vehicle on time means that you default on your car loan. 

Florida Section 537.012 establishes that when debtors fail to repay what they owe, lenders may repossess the car or vehicle associated with that loan. However, according to Florida laws on repossession, lenders must follow certain considerations.  

Some examples of these considerations include, but are not limited to:

  • Repossess the vehicle through a licensed agent.
  • Give debtors the opportunity to deliver the vehicle at a place, time or date that is convenient for both parties.
  • Allow debtors to recover personal property that was left in the vehicle. 
  • If the car is going to be sold, notify the debtor about the date, place, and time of the sale. 
  • Provide written notice of the amount due, interest accumulated, and reasonable expenses the lender incurred to recover and sell the vehicle. 
  • Allow debtors to redeem their car through a lump sum payment. 

How does car repossession in Florida work?

When debtors stop paying their car loan, the lender can hire a licensed agency to seize the vehicle in question. This is what is known as involuntary repossession. On the other hand, voluntary repossession occurs when debtors willingly return the car to the lender because they cannot keep up with their payments. 

Contrary to popular belief, repossession in Florida does not mean your balance has been automatically erased. In fact, repossession laws indicate that debtors must pay for reasonable expenses that the creditor (i.e. lender) incurred when taking possession of the vehicle and preparing it for sale. 

If you opt to surrender your car (voluntary repossession), you are contributing to reducing your lender’s expenses. This means that you are also cutting down the money that, otherwise, you should have paid.

Florida Section 537.012 establishes that lenders must provide debtors with a written account of the total amount due (expenses, current loan balance, and interest). They should also send a notice of sale 10 days before the sale of your car. 

In some situations, the money collected from the sale may not be enough to cover the debt. According to Florida Section 516.31, lenders can try to recover the unpaid balance (deficiency) only if this debt is greater than $2,000. 

For example, Ashley had $38,000 in auto loan debt at the moment of repossession. After the sale, Ashley’s loan had a deficiency of $15,500. Because the unpaid balance was greater than Florida’s limitation, her lenders sued her to try to collect this debt. 

In situations where the sale proceeds surpass the debt, the debtor will be entitled to receive the excess. 

How Can Bankruptcy Help You Handle Your Car Loan Debt

As established before, repossession in Florida does not necessarily wipe out an auto loan balance. Your situation may be more complicated if you have other significant debts. Bankruptcy is a suitable debt relief option for Floridians struggling with indebtedness. 

Filing for Chapter 13 in Florida may be for you if you have disposable income and you are looking to keep all of your property. Under this bankruptcy, debtors are allowed to spread their unpaid balance throughout their case. 

Additionally, the amount you have to pay for your secured property is based on the market value of that asset. Because of this and the fact that payments can be rescheduled for an extended period of time, the monthly installments for a Chapter 13 are lower than the pre-bankruptcy payments. 

If a bankruptcy attorney determines that Chapter 7 is a more viable option for you, you will have the option to: 

  • Surrender your car and discharge your auto loan debt. 
  • Pay a lump sum imposed by the court and keep the car. 
  • Reaffirm the debt and avoid losing your vehicle. 

Since Chapter 7 discharges credit card debts and other unsecured creditors, debtors may get the financial relief they need to keep paying for their vehicle. When filing for bankruptcy, the automatic stay prevents debtors from pursuing repossession actions. 

Facing Car Repossession? Speak to an Orlando Bankruptcy Attorney

While repossessions happen on a daily basis, losing your car as a result of an unpaid balance can be frustrating. If you have fallen behind on your car payments and you are concerned about having your car repossessed, a bankruptcy attorney near you may be able to help you explore your debt relief options. 

Z. Hernandez Law is a law firm serving clients filing for bankruptcy in Orlando, Ocoee, Kissimmee, Maitland, Ocala, Longwood, Lockhart, Daytona, and surrounding cities. If you are considering bankruptcy, contact us today to schedule an appointment. 

Legal information reviewed by:
Zarina Hernandez | Founder & Attorney

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