On your own letterhead paper write or print out a notice which includes the name, address, and phone number of the defaulted client. Explain that you have attempted to contact them to no avail. Notify that they must contact you in order to come to a resolution to their outstanding payments.
List the vehicle that is in question along with its VIN number.
Give a final date that all past due payments are due by (labeled “last date for payment”) and the amount due to catch payments up (labeled “amount now due”). Explain that:
“If you pay the amount now due by the last date for payment you may continue with the contract as though you were not in default. If you do not pay by that date, we may exercise our rights under law, including involuntary repossession of the vehicle in which we hold a security interest.”
Remember that as time passes until the due date you assign more payments due may accumulate. Include in the letter that by the due date these payments will also be due and list each payment by amount and normal scheduled due date, i.e. “date due_______ Amount _______”
After listing these payments that will accumulate by the final due date explain that:
“In order to fully cure your account, and in order to prevent the exercise of our legal rights under the law, the payment or payments listed above must ALSO be paid in full on or before the last due date for payments”
Inform that even if the account is caught up you still have the right to take action in the event that payments fall behind again within a designated amount of time:
“If you are late again within the next____weeks in making your payments, we may exercise our rights, including repossession, without sending you another notice like this one.”
Explain your rights to collect further monies owed under the lien contract:
“The rights we may exercise under the law include repossession of the motor vehicle securing this debt. If the motor vehicle is repossessed, either voluntarily or involuntarily, it may be sold and you may owe the difference between the net proceeds from the sale and the remaining balance due under the contract.”
Ask the client to contact you right away if they have any questions.
Close the letter with:
“If we do not hear from you within___days, we will have no choice but to put out a REPOSSESSION ORDER on the vehicle.”
Sign it and have it notarized.
Mail the letter certified with delivery confirmation and return address requested. This way you have 2 ways of confirming and proving that they did receive the notice in case legal questions arise after the repossession.
You also obtain any forwarding address if the client has moved so that you can more easily locate the vehicle. The return address requested will send the letter back to you if they have moved instead of being forwarded to them.
If payment has not been made and you are ready to repossess the vehicle you need to write or type a REPOSSESSION ORDER. This will state the following:
Default of contract
[vehicle year, make, model, VIN]
Net Payoff Balance: [Total bottom line balance owed]
Repo fee: [$ amount of the repo fee you charge]
Storage fee: [$ amount of the storage fee you charge]
Damage: [$ amount of any damage known to be done to the vehicle] You may also write TBD or To Be Determined here
Total: Add up all of these amounts and enter the total here
The named buyer is in default of installment loan contract and payment is under uniform and commercial state and local codes covering installment contract.
We agree to indemnify and save [your name/business name] harmless from and against all claims damages, losses, and actions resulting from or arising out of our efforts, except as may be caused by negligence or unauthorized acts by our agents representing us.
Dealer Authorizing Repossession
[your name/business name, address, and phone number here]
Notarize at the bottom
-Make a copy of the order for your records and give the order to your repossession agent (the person performing the actual vehicle acquisition).
Note that –
* If you follow these steps you will have done a legal repossession.
* Many people do not send a notification letter because many times a client will attempt to hide the vehicle once they have received a letter like this, especially if they have no intentions of paying.
* Most people are unaware of their rights when it comes to a vehicle repossession so they usually don’t report someone who has not followed proper procedure, however, If you do not send the certified letter notifying them of their default and giving them opportunity to make payment they have grounds to report you to the state’s DMV Dealer Services and the state’s Attorney General which can result in you being fined as well as taken to court for violating repossession laws.
* Keep in mind that some states do not allow a repossession to take place on private property if the repossession agent is asked to leave (some states require him/her to leave and for you to obtain a court order).
* Some states have no restrictions on public property.
* Some states forbid repossession to take place at a client’s place of employment.
* Be sure to check specific repossession laws pertaining to your state.