In Massachusetts, auto lenders can recoup their losses from debtors who do not pay their loans by repossessing and re-selling their vehicles. Lenders must follow certain procedures, such as sending proper written notice and giving the debtor enough time to respond, before they can repossess vehicles. If you refuse to allow the lender to repossess your vehicle, the lender must get a court order to do so.
Written Notice Requirement
In Massachusetts, if a person defaults on a car loan, the lender must send him a written notice called a "right to cure" letter. This letter, which must be sent at least 21 days before repossessing the vehicle, informs the payee that his loan is in default and that he has 21 days to make payment arrangements. If the payee does not pay the balance he owes or make arrangements to do so with the lender, the lender may repossess the vehicle.
Peaceful Repossession
After the 21-day period has passed, the Massachusetts lender may "peacefully repossess" the vehicle. This means that the lender or the lender's agent repossesses the vehicle without a court order. The debtor must be present at the time of repossession and must consent to the repossession. If the debtor objects, the lender must go to court to get an order of repossession.
Notice of Redemption
Once the vehicle is repossessed, the lender must send the debtor a written notice explaining how the debtor may redeem the vehicle. The debtor has 20 days to pay the balance required to redeem the vehicle. After 20 days, the lender may sell the vehicle or auction it off to settle the debt.
Deficiency Judgment Law
If the debtor owes more than $2,000 on the vehicle, the lender may seek a deficiency judgment against her in Massachusetts court after reselling the vehicle. The deficiency judgment requires the debtor to pay the difference between the sale price and the amount she still owes on the vehicle.
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