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What you can do if you fall behind on car payments in Indiana

Posted at 9:09 AM, Apr 22, 2020
and last updated 2020-04-22 09:09:16-04

INDIANAPOLIS — COVID-19 is making it difficult for many Hoosiers to pay their bills—perhaps because of a loss of income or a job loss.

If you’re behind on your car payments, or you expect to fall behind, the Federal Trade Commission says there’s a few things you can do:

  • Contact your lender now. Some banks, credit unions, and auto financing companies are letting people delay payments or renegotiate their payment schedules. If your lender agrees to any changes, make sure you have them in writing for later.
  • See if you can refinance your loan. This makes sense if a lower interest rate or longer loan could make your car payment doable. Just make sure you refinance with a credible lender or company. Depending on how much your car is worth and how much you owe on it, you also could look into selling your car or trading it in to get something cheaper before you miss a payment.
  • Don’t do nothing. Even if you have to miss a payment, don’t be afraid to talk to your lender to learn about your options. If you miss payments, you could be charged a lot more in fees and hurt your credit. While many lenders have begun to voluntarily forego repossessions during the pandemic, if you get behind on your payments, your lender still could repossess your car — sometimes without warning.

Call 6 Investigates also checked with the Indiana Attorney General to find out what your legal rights are in Indiana.

Director of Consumer Protection Betsy DeNardi told RTV6:

When a vehicle is repossessed in Indiana, lenders must do the following:

  1. Provide a letter to the consumer after the repossession informing the consumer of the total amount the consumer needs to pay to reclaim their vehicle, along with the date and the location of the eventual sale of the repossessed vehicle.
  2. If there is personal property in a repossessed vehicle worth at least $10.00, the lender must inventory the personal property and provide written notice to the consumer of the property found in the vehicle. The consumer then has 30 days to retrieve the personal property from the vehicle.

“In addition to reaching out to the lender about programs or options available if the consumer cannot make payments, the consumer can also consult their lender about refinancing to reduce the monthly payments,” said DeNardi. "Hoosiers who may be in danger of falling behind on car payments should reach out to their lender to see if there are any programs or options available that will allow them to miss payments or pay a portion of the original payment."
Just know, you may still owe money after your car is repossessed, and you could be on the hook for any “deficiency” — the difference between what your car sells for and how much you still owe on it, plus any fees related to the repossession. In most states, your lender is allowed to sue you for it.

An attorney can tell you whether you have grounds to contest a deficiency judgment, according to the FTC.

The bottom line—you have options, but don’t wait to explore them.

For more, read the FTC’s article on Vehicle Repossession and this blog from the CFPB to learn more.