Car Repossession in South Carolina: What You Need to Know
March 24, 2023Debt Collection Abuse
Repossession is a process in South Carolina that allows a lender to take back a car when a borrower defaults on the loan or lease payments or some other condition of the loan (like keeping up collision insurance).
While a lender does not need a court order to do this, they may take a specific action that can be considered wrongful — and create potential legal claims by the borrower.
Here are the “Big 4” “No-No’s” for lenders repossessing cars in South Carolina.
1. Breach of the Peace
Lenders are prohibited from using force or threats of violence to repossess a car in South Carolina. They are also not allowed to damage property or break into a locked garage or other secured areas to take the car.
And they are never allowed to threaten or injure a borrower physically. If a lender — or its repossession agent — violates these rules and breaches the peace during the repossession process, the borrower may have a legal claim against the lender.
2. Improper Notice
Lenders must provide the borrower with a 14-day “notice to cure” before repossessing the vehicle.
But here’s the catch: they only need to do it one time during the life of the loan. That means if you pay late once, then become current with payments, and subsequently get behind again, the creditor does not need to give you any other notice and can repossess your car immediately.
After the repossession, you’re entitled to another notice telling you the creditor’s plan for selling the vehicle (and what you can do to get it back).
Usually, this means paying off the entire balance plus repossession fees. If this notice (or a notice to cure) has never been sent, a borrower may have claims against the lender.
3. Failure to Sell in a Commercially Reasonable Manner
After a car is repossessed, the lender must sell it in a commercially reasonable manner to recover the outstanding debt.
If the lender fails to sell the car commercially reasonably, the borrower may have a legal claim for damages. If, after the sale, there is still a balance due, a lender can sue to recover it. But if the sale results in surplus money after the loan is paid, it must be returned to you (more on that below).
4. Failure to Account for Surplus Funds
If the sale of the repossessed car generates more money than is needed to pay off the outstanding debt, the lender must account for the surplus funds.
These funds should be returned to the borrower.
If the lender fails to account for surplus funds, the borrower may have a legal claim for damages.
If you believe your car was wrongfully repossessed, consult an experienced attorney to discuss your legal options. You can tell us more about your repossession situation right here.
Happy Motoring!
