Why Repossessions Are Surging Right Now
You might be seeing stories about more cars being repossessed or worried it could happen to you. It’s true: there’s a serious rise in repossessions right now. And we’re definitely seeing it in our hometown of Memphis.
There are several reasons behind it. As a bankruptcy lawyer, I can help you understand what’s going on and what you can do if you’re at risk.
Rising Auto Loan Defaults and Delinquencies
One of the biggest reasons repo numbers are up is because more people are falling behind on their car payments. Auto loan debt in the U.S. now exceeds $1.66 trillion, and defaults are rising across all credit levels – not just among subprime borrowers.
When your income drops at the same time expenses rise – as is so common in the U.S. right now – making each payment gets tougher.
From there it’s a devastating spiral, as missed payments lead lenders to start the repossession process.
Higher Interest Rates and Tighter Credit Terms
Interest rates have gone up significantly in recent years. And rising interest rates can make loan payments more expensive.
As monthly payments increase, some borrowers fall behind. And if you miss too many payments, the lender may repossess your vehicle to recover the balance. It’s a growing risk for families already struggling to keep up with rising costs.
On top of that, some auto lenders have tightened their lending standards. That means people with weak credit or lower income are getting loans with harsher terms, which makes default even more likely.
Inflation and Cost of Living Pressures
In addition to the above, there’s inflation. Everything is more expensive – rent, groceries, gas, insurance.
When those costs rise, there’s less money left over for debt payments. Many people are forced to choose between their essentials and their car loan payments. Unfortunately, car payments often lose out.
Expiration of Pandemic-Era Relief Programs
During the pandemic, measures like stimulus checks, loan forbearance, and assistance programs helped many people stay afloat. As those extra supports have ended, many households have been exposed to full financial strain again.
Without that safety net, people who survived by a narrow margin are now falling behind – and repossessions are one of the first consequences.
Use of Third-Party Repo Agents and More Aggressive Lenders
More and more, lenders are using third-party repossession firms – called forwarders – to carry out repossessions.
These firms often raise costs and act more aggressively. They charge higher fees and create more consequences. And the use of forwarders has increased over recent years.
That means repossession may happen more quickly, and with more frustration for the vehicle owner.
Negative Equity and Underwater Cars
Many people owe more on their auto loan than the car is worth. This is called negative equity.
And as a result, getting out of a loan – even by selling the car – isn’t feasible. When things go south financially, walking away becomes harder and repossession becomes more likely.
Also, because used-car prices jumped during pandemic supply constraints, many loans were inflated to reflect how much people wanted and needed them. Now, as prices drop or stabilize, borrowers are stuck with big loans for devalued cars.
What You Can Do If You’re Facing Repossession
First, don’t wait until your car is gone. Contact your lender immediately to discuss hardship or revised payment plans. Sometimes lenders will modify payment terms or allow a short plan to bring your loan current.
You should also know your rights: Every state has laws about how and when a vehicle can be repossessed. Repossession has to be done without “breaching the peace.”
Assuming all your negotiations don’t work, filing for bankruptcy brings in an automatic stay. This immediately stops repossession and gives you breathing room.
If you’re already behind or worried, an attorney can help protect your interests and explore options before it’s too late.
How Our Memphis Repossession Lawyers Can Help
Repossession isn’t just about missing one payment. It’s about a series of economic pressures that push people to the breaking point.
If you’re feeling that pressure now, remember: you’re not alone, and there are options to fight back.
Let’s talk about your situation and figure out a plan that gives you the best options for your future. The conversation is totally free, no strings attached.
Contact us online today or call 901-327-2100.