Maryland Repossession Laws: Your Rights When You Default

Repossession happens when a lender takes back your car after you default on your loan. Each state has unique laws governing this process. You need to understand Maryland’s specific rules if you’ve fallen behind on payments.

Knowing your rights can help you take action before losing your vehicle.

How Many Payments Can You Miss Before Repossession in Maryland?

Your lender can repossess your car as soon as you default on the loan. Default usually means missing payments. It can also happen if you break other contract terms.

Common contract violations include failing to maintain proper insurance coverage.

Will You Get Notice Before Repossession?

Maryland law doesn’t require lenders to warn you before repossessing your vehicle. Some lenders choose to send notice anyway. When they do, they must send it at least 10 days before taking your car.

The notice typically goes to you and any co-signer. It provides a date after which repossession may occur.

If the lender skips this notice, they generally can’t charge you for repossession costs. These costs include towing and storage fees.

Maryland allows self-help repossession. Your lender can take the car without going to court. They don’t need to tell you exactly when or where.

How You Can Prevent Repossession

Catching up on missed payments can stop a repossession. Check your loan documents to see how much time you have. Call your loan servicer if you’re unsure about deadlines.

Many people make late payments by phone to avoid processing delays.

Contact your lender immediately if you’re facing financial hardship. Some lenders offer forbearance or loan modifications. Forbearance provides a short-term pause on payments.

Filing for Chapter 7 bankruptcy is another option. When you file, an automatic stay takes effect. This legal protection temporarily stops most collection efforts, including car repossession.

You can speak with a bankruptcy attorney for free to explore your options.

What Repo Companies Can Do in Maryland

Repo companies in Maryland must have a valid collection agency license. The tow truck driver may not carry a copy. You can ask for the company’s name and contact information to verify their license later.

Repo agents can take your car from public streets or your driveway. They cannot use force, break laws, or cause a disturbance. Creating a disturbance is called “breaching the peace.”

You can calmly ask the agent to leave your property if you’re present. Their refusal might constitute a violation of your rights. Never physically block the tow truck or confront the agent.

Physical confrontation can lead to dangerous situations or criminal charges.

Personal Property in Your Repossessed Car

The repo company and lender cannot keep or sell your personal belongings. Call the repo company or lender immediately after repossession. Ask them how you can retrieve your items.

Remove all personal belongings before repossession if you think it might happen soon. You’ll avoid the stress of recovering them later.

What Happens After Repossession in Maryland

The lender must send you a written notice within five days after repossession. This notice explains your right to redeem the vehicle. It tells you where your car is stored and provides payment instructions.

The lender must hold your car for at least 15 days. This gives you time to get it back.

If the lender decides to sell your car, they must send a second notice. This notice must arrive at least 10 days before the sale. It includes the date, time, and location of the public auction. For private sales, it provides the earliest possible sale date.

When Your Car Gets Sold

What happens next depends on how much you’ve paid on your loan.

If you’ve paid more than 60% of the loan or purchase price, Maryland law requires the lender to start the sale within 90 days. This assumes you haven’t signed away your rights. This rule protects your right to any surplus money.

You get the surplus if the car sells for more than you owe plus costs.

If you’ve paid less than 60%, the lender can keep your car instead of selling it. They must send you written notice first. You have 30 days to object in writing.

If you don’t object, your loan is usually considered settled. You typically won’t owe anything more.

Lenders must handle all sales in a commercially reasonable way. They must try to get a fair market price.

Do You Still Owe Money After Repossession?

You may owe the difference if the sale doesn’t cover your full loan balance. This difference is called a deficiency balance. Your final notice will show your unpaid loan amount plus repossession-related fees.

These fees include towing, storage, and sometimes prepayment penalties.

The lender usually can’t collect the unpaid amount if they don’t send this notice.

Some people choose to voluntarily surrender their car to avoid extra costs. You return the vehicle before it’s taken. Voluntary surrender doesn’t eliminate the debt. It may reduce the total you owe by avoiding some repossession costs.

The lender may take you to court for a deficiency judgment. If the court agrees, the lender can use collection methods like wage garnishment.

Can You Get Your Car Back After Repossession?

You may be able to get your car back after repossession. Getting it back can be difficult. State law requires the lender to send written notice within five days.

The notice must explain:

• Your right to redeem the vehicle
• Whether you may still owe money after the sale
• Where the car is being stored
• Where to send payments if you want to redeem it

The lender must hold your car for at least 15 days after sending the notice.

You’ll usually need to reinstate the loan to get your car back. Reinstatement means catching up on missed payments. You must also pay late fees and cover repossession costs.

You may need to pay the full loan balance in certain situations. These include if your car was repossessed within the last 18 months. Fraud or serious misuse also triggers full payment requirements.

Many people struggle to gather enough money in such a short time. The financial issues that caused repossession often make this impossible.

Where to Find More Information About Maryland Repossession Laws

• Maryland Department of Labor: Information about repossessions, including how to file complaints and licensing requirements
• Maryland Court Help Center: Free limited legal services for unrepresented individuals
• Maryland Legal Aid: Free legal services for low-income Maryland residents
• Legal Services | 211 Maryland: Connect to free or low-cost legal help
• Maryland Repossession Law