I have an auto loan for my vehicle. I have nearly paid off the vehicle, but I’m behind on payments and the bank has filed a lawsuit to repossess the vehicle. The car is worth more than I owe. What are my rights?
If you have stayed a creditor’s action to repossess any personal property (as described in the section “What SCRA protections are available in legal proceedings?”), the court may seek an appraisal of the property at issue and, if it grants the creditor’s request to repossess, may order that the creditor pay you the value of your equity in the property. If the property is sold at auction, you should ask the court to ensure the auction is widely advertised so that there is enough competition that the property sells at close to its market value. That will maximize your equity and minimize any deficiency judgment against you.
Note that this only applies to personal property (like a vehicle), not real property. If you can demonstrate that repossession of the property will impose undue hardship on your dependents, you may ask the court to simply halt the repossession and not order any kind of payment to the creditor until you are in a better position to pay.
As always, if you are concerned that a creditor might soon repossess your property, talk to a military legal assistance attorney right away.