(InvestigateTV) - Briana Bellinger-Dawson was caught off guard when she couldn’t find her car in the parking lot outside of a grocery store last spring.
“I thought my car was stolen, and my heart was racing,” Bellinger-Dawson said. “I usually know exactly where I park. So, I kind of freaked out just a little bit.”
In March of last year, at the start of the pandemic, Bellinger-Dawson discovered that her 2017 Nissan Rogue had been repossessed by the bank.
She said her car payments were more than $600 a month, not including insurance, which increased her bill to over $800.
Bellinger-Dawson was behind on her payments after she said her hours as an art teacher were cut back during the pandemic. But she managed to work out a payment plan with the finance company and got her car back in three days.
“I pulled out all of my emergency funds,” Bellinger-Dawson said.
Bellinger-Dawson was lucky. With record unemployment and a record number of auto loans, thousands of others may not have the same good fortune.
“In difficult financial times, repossessions will go up,” said Daniel Blinn, the managing attorney of Consumer Law Group, LLC based in Connecticut.
Blinn has settled over a dozen repossession class-action lawsuits in which finance companies failed to give consumers like Bellinger-Dawson advance notice of a delinquent payment.
“It’s an unusual situation where somebody is able to work out a reinstatement or redemption of the contract,” Blinn said. “Unfortunately, the amount of time in between when the repossession happens, and the vehicle gets sold, it’s too quick and it’s very difficult to get a court order to stop it.”
He told InvestigateTV that consumers have been forced into filing bankruptcy as the only way to keep their vehicles from being auctioned off.
The U.S. Public Interest Research Group’s Education fund and the Frontier group released a recent report that revealed, at the start of the pandemic consumers had a record amount of automobile debt.
Nearly 116 million consumers had an open auto loan in the first quarter of 2020. That was a 40% jump compared to the same period in 2010, according to the report.
The report also revealed that the Consumer Financial Protection Bureau’s complaint database showed that the agency received 2,844 auto loan and lease complaints from March to July of 2020.
The bureau pointed out that auto loan payment relief complaints were higher than any other reported complaints within a five-month period in the history of the consumer complaint database.
Nearly 300 consumers said lower payment requests were denied from March through July. The CFPB confirmed that the complaints more than doubled in volume from the same period in 2019.
The report stated 70% of the people were denied relief and close to 60% of complaints focused on lender attempts to repossess or disable a vehicle within that same time frame.
Some states temporarily halted repossessions, but not all of them.
InvestigateTV reached out to all 50 states and the District of Columbia for their policies on halting repossessions. Of the states that responded, those that had moratoriums set them to expire around the end of 2020. A couple of states, such as Arkansas and Kentucky, said they never had a moratorium.
Some states keep monthly repossession data through documentation required for a lender to take back a vehicle.
Kansas and Indiana track repossessions through their revenue departments in what are called “certificates of repossession.”
The state of Kansas had a just over 13,000 cars repossessed in 2020. That was a 34% drop from all the cars repossessed in the state in 2016, when lenders took back more than 20,000 vehicles. In Indiana, there was a 31% reduction with more than 73,000 repossessed vehicles.
“Many states had stay at home orders, were limiting activity to essential business. In some states, we actually had clarification from different state entities that essential business did not include repossessions,” said John Van Alst, of the National Consumer Law Center.
Van Alst is an attorney who specializes in automobile fraud for the consumer advocacy nonprofit based in Boston.
He said many pandemic-related policies likely led to the drop in repossessions.
“There were enhanced federal unemployment benefits. There was the stimulus money that went out. We had a number of states that had some sort of restrictions for a time on the use of repossession,” Van Alst said.
But many of those protections have expired. As of October, the state of Maryland and District of Columbia were the only ones that still had moratoriums on auto repossessions, according to Auto Finance News.
Van Alst predicts a real uptick in repossessions in 2021.
“Part of it’s the backlog, part of it is…we have really high unemployment in the U.S. and a lot of people, maybe, no longer receiving unemployment benefits.” Van Alst said.
He also anticipates more financial hardships for consumers who have deferred payments or refinanced auto loans.
“Their car might continue to depreciate, but suddenly they may have extended the terms of their loan or out another four or five or six months. And for most accommodations that were provided those financing costs continue to accrue,” Van Alst said.
If you fall behind on your vehicle payments, here are some tips from the Federal Trade Commission:
- Contact your lender now to delay payment or renegotiate the payment schedule. Get the new terms in writing.
- Find out what rights you have in your state by checking with your state attorney general or local consumer protection agency.
- See if you can refinance your loan with a credible lender or company.
- Don’t ignore the debt. Despite the pandemic, if you get behind on your payments, your lender could still repossess your vehicle without warning.
After navigating through a bumpy process, Bellinger-Dawson would add another important tip to the FTC’s list.
“I would definitely do a lot more research into what it takes to make the payments for the car,” she said.
In most states, your lender can sue and receive a judgment against borrowers for unpaid debt. An attorney can tell you whether you have grounds to contest a deficiency judgment.
A judgment on your credit record could hamper your ability to buy a car for years.
InvestigateTV News Content Specialist Peter Buffo contributed to the research for this report.