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November 01, 2018

Installment Contracts for Purchase or Lease

I am serving overseas. I have fallen behind on the loan I took out to buy my car, which I left back home before going overseas. Can the bank repossess my vehicle without me knowing about it?

If you entered a contract to buy or lease real or personal property—like an auto loan or an auto lease—prior to going on active duty, a creditor cannot repossess the property without first obtaining a court order. In other words, the creditor cannot simply come to your home and tow away the vehicle as it might ordinarily be able to do if you fall behind on your payments. If, however, you’re in default of the loan and don’t really have a way to bring the payments current, you may wish to negotiate surrender of the vehicle with the creditor in exchange for not putting a repossession on your credit report.

If you’re in default and can’t negotiate surrender of the vehicle, a creditor wanting to repossess the car in compliance with the SCRA must serve you with notice of a court proceeding to collect the debt and respossess the car, in which you assert your SCRA rights. If your creditor does not follow the law and repossesses the property without a court order, you have remedies available to you under the SCRA. Talk with your legal assistance attorney if you believe a creditor has wrongfully repossessed your property without a court order.

Note that the requirement for a court order pertains only to preservice contracts. Any property you bought subject to a contract or loan after going on active duty may lawfully be repossessed by the creditor without a court order.