Debtors may face repossession of their vehicle if they fail to maintain the payments or insurance.
The state of Louisiana provides guidelines for debtors and creditors regarding the repossession of vehicles. Creditors in Louisiana are within their rights to take back or repossess a vehicle when the debtor fails to maintain the payments or insurance. This is known as a loan default.
After Default
After a debtor defaults on a vehicle loan, the creditor may seize the vehicle. Repossessed vehicles in Louisiana may be sold to pay off the remaining balance of the vehicle loan. According to Louisiana revised Statutes 6:965 through 6:967, self help repossessions are illegal in Louisiana. A self help repossession is one done without prior notice and without a court order. Creditors who wish to repossess a vehicle in Louisiana must obtain a court order to seize the vehicle. According to Law Dog, creditors must submit a certified copy of the judgment that authorizes the creditor to seize the vehicle. Once the creditor has seized the vehicle, he or she must file an affidavit with the court verifying that the creditor has taken possession of the vehicle.
Reinstatement and Redemption
Louisiana creditors may reinstate a vehicle loan if the debtor provides payment for all past due amounts and agrees to remain current with future payments. If reinstatement is not an option with a creditor, the debtor has a right to redeem the vehicle after repossession. Redeeming the vehicle requires the debtor to satisfy the entire remaining balance on the loan, including any costs associated with the repossession of the vehicle. Costs may include legal fees, holding costs and the cost of scheduling a repossession sale. Louisiana law requires the debtor to redeem the vehicle before the creditor has made arrangements for the sale of the vehicle.
Vehicle Sale/Deficiency
Creditors may choose to sell a repossessed vehicle in a public sale to satisfy the remaining loan balance. Louisiana creditors have the option of retaining a vehicle instead of selling it. A creditor who wishes to retain a repossessed vehicle must give written notice to the debtor informing him or her of the creditor's intentions. Debtors have a right to object to the creditor retaining the vehicle. They must send written objections to the creditor within 21 days of receiving the notice from the creditor. If a creditor sells the vehicle in a public auction or private sale, the debtor will be held liable for any amounts that are due after the proceeds of the sale are collected. Proceeds will be added first to the cost of repossession, followed by legal fees and the remaining proceeds will be added to the remaining loan balance. Any amount that is still owed on the loan is known as a deficiency.
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