Having a vehicle repossessed can be a stressful and confusing experience. For many Wisconsin residents, a car is essential for getting to work, taking children to school, attending medical appointments, and managing everyday responsibilities. When financial difficulties make it hard to keep up with vehicle payments, borrowers may face the possibility of repossession.

Understanding why vehicle repossessions happen in Wisconsin, how the repossession process works, and what rights consumers have can help borrowers make informed decisions and recognize when a lender or repossession company may have acted improperly.

This article is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. For guidance specific to your situation, consult a licensed Wisconsin attorney.

Why Do Vehicle Repossessions Happen?

Most vehicle repossessions occur because the borrower has defaulted on the terms of their loan or financing agreement.

The most common reason is missed payments. However, default can occur for other reasons depending on the terms of the loan agreement.

Common reasons for repossession may include:

• Missing one or more required payments.
• Failing to maintain required vehicle insurance.
• Violating another material term of the financing agreement.
• Failing to comply with certain obligations required by the loan contract.

The specific terms of the loan agreement are important. A borrower should review their financing contract to understand what the lender considers a default.

How Does Vehicle Repossession Work in Wisconsin?

When a borrower defaults on an auto loan, the lender may have the right to take possession of the vehicle because the vehicle serves as collateral for the loan.

In many situations, a lender can repossess a vehicle without first filing a lawsuit or obtaining a court order. However, the lender and any repossession company acting on its behalf must still comply with applicable laws.

The process generally follows several stages.

Default on the Loan

The repossession process typically begins after the borrower defaults under the terms of the financing agreement.

It is important to understand that a lender may not necessarily be required to wait until several payments have been missed before considering a borrower in default. The terms of the contract and applicable law may determine when the lender has the right to take action.

The Repossession Company

A lender may hire a repossession company to locate and recover the vehicle.

Repossession companies may locate vehicles in places such as:

• Driveways.
• Apartment parking lots.
• Public parking areas.
• Workplace parking lots.
• Streets or other accessible locations.

However, repossession companies do not have unlimited authority when recovering a vehicle.

Repossession Must Be Conducted Without a Breach of the Peace

One of the most important protections for Wisconsin consumers is the prohibition against a breach of the peace during a repossession.

Generally, a lender or repossession company cannot use force, threats, violence, or other improper conduct to take possession of a vehicle.

Potential examples of a breach of the peace may include:

• Physically threatening or assaulting the borrower.
• Using force to take the vehicle.
• Breaking into a locked garage.
• Damaging property to gain access to the vehicle.
• Continuing an aggressive confrontation that creates a risk of violence.

Whether a particular repossession constitutes a breach of the peace depends on the specific circumstances.

What Happens After the Vehicle Is Repossessed?

After the vehicle is repossessed, the lender will typically provide information regarding what happens next.

Depending on the circumstances, the borrower may receive notices concerning:

• The repossession.
• The amount required to recover or redeem the vehicle.
• The lender's plans to sell the vehicle.
• The time and method of the sale.
• The possibility of a deficiency balance.

These notices can contain important deadlines, so they should be reviewed carefully.

Can You Get Your Vehicle Back?

In some situations, a borrower may have the right to redeem the vehicle after repossession and before it is sold.

The amount required to redeem the vehicle may depend on the loan balance, missed payments, repossession expenses, and other amounts permitted under the contract and applicable law.

Because the time available to redeem a vehicle may be limited, borrowers should act quickly if they want to explore this option.

What Happens When the Vehicle Is Sold?

If the vehicle is not redeemed, the lender may sell it to recover some or all of the remaining loan balance.

The sale generally must be conducted in a commercially reasonable manner.

After the sale, the proceeds are applied to the amounts owed. Depending on the circumstances, this may result in either a surplus or a deficiency.

What Is a Deficiency Balance?

A deficiency balance is the amount the lender claims remains after applying the proceeds from the sale of the repossessed vehicle to the outstanding debt and any applicable charges.

For example, if a borrower owes $15,000 and the vehicle sells for $10,000, the lender may claim that a balance remains. However, the actual calculation can involve additional factors, including expenses and charges that may or may not be legally recoverable.

Consumers may have defenses to a deficiency claim if the lender failed to comply with applicable repossession or sale requirements.

What Happens to Personal Property Left Inside the Vehicle?

Repossession generally gives the lender the right to take the vehicle, not ownership of your personal belongings.

Items such as clothing, electronics, work equipment, documents, and other personal property may need to be returned.

If personal property is missing, damaged, or improperly withheld, the borrower may have additional legal rights.

What Are Your Rights During a Vehicle Repossession?

Wisconsin consumers may have important rights during and after the repossession process, including:

• The right to a repossession conducted without a breach of the peace.
• The right to receive legally required notices.
• The right to recover personal belongings from the vehicle.
• The right to redeem the vehicle in certain circumstances.
• The right to challenge improper sales or deficiency balances.
• Protection against unlawful debt collection practices.

The specific rights available depend on the type of loan, the terms of the agreement, and the circumstances surrounding the repossession.

Can a Consumer Protection Attorney Help?

A consumer protection attorney can review the facts surrounding a vehicle repossession and determine whether the lender or repossession company followed the law.

An attorney may be able to help by:

• Reviewing the vehicle financing agreement.
• Investigating the circumstances of the repossession.
• Determining whether a breach of the peace occurred.
• Reviewing post-repossession notices.
• Examining whether the vehicle sale was commercially reasonable.
• Challenging an improper deficiency balance.
• Assisting with the recovery of personal property.
• Defending against a lawsuit involving a deficiency balance.

Not every repossession is unlawful, but consumers should understand that lenders must still comply with applicable legal requirements.

Conclusion

Vehicle repossession in Wisconsin usually begins when a borrower defaults on a vehicle financing agreement. Although lenders may have the right to repossess a vehicle in certain circumstances, the repossession must still be conducted lawfully, and consumers may have important rights before and after the vehicle is taken.

Understanding why repossession happens, how the process works, and what rights you have can help you respond effectively if you are facing the loss of your vehicle.

Attorney Nathan DeLadurantey offers free consultations to explain your legal rights in Wisconsin. Free consultations can be scheduled online.