If your car is repossessed in the Show Me State, it's not necessarily the end of the issue. Missouri law allows the lender to still come after you for the deficiency -- the gap between the amount the lender received from selling the car and your unpaid loan balance. The lender also can tack on the cost of hiring a repossession company and preparing the vehicle for sale. You may have to pay the lender's legal fees as well. To top it all off, if you fail to pay the deficiency you may get hit with a civil lawsuit from the lender.
If you paid less than $500 for the automobile, or owed less than $300 on your loan, Missouri law doesn't permit charging a deficiency.
Notice of Default and Right to Cure
Under Missouri law, the lender must send the borrower a "Notice of Default and Right to Cure" before attempting to repossess the motor vehicle, but the timing is quite specific. It must wait until the account is at least 10 days past due before sending the notice. When it does send the notice, it must give the borrower at least 20 days to "cure the default," or pay the amount owed.
If the borrower pays within 20 days after the initial notice, but then again fails to pay within 10 days after payment is due, you must repeat the noticing procedure.
Self Help Repossession
As a self-help repossession state -- meaning no court action is required -- Missouri permits the lender to take back the vehicle after the end of the second 20-day Notice to Cure. The state doesn't license repossession agents, and allows repossession as long as doesn't involve a "breach of the peace." That's a rather vague term, and violations may range from getting into fights with the debtor to simply "disturbing" them, depending on the interpretation. If the debtor calls the police, the situation ends up in court and the person trying to repossess the car is found guilty, the first offense is a Class B misdemeanor. If the person is found guilty a second time, the offense is a Class A misdemeanor. For third or subsequent offenses, the guilty party must pay a fine ranging from $1,000 to $5,000.
Notice to Sell Property
Once the car is repossessed, the borrower must receive a "notice to sell property" from the lender, which also indicates that the latter intends to file for a repossessed title. The notice advises the borrower that he has ten days to redeem the collateral -- pay the entire amount of the outstanding car loan, plus other applicable fees. The notice includes the proposed date, time and place of a public auction. If the lender intends to sell the vehicle privately, the notice must include the date after which the vehicle will be offered for sale.
If the car sells for more money than owed, plus any fees, the default borrower should receive the difference.
If you can't pay off your car loan and want to avoid repossession, consider filing for bankruptcy. Contact an attorney to see if an automatic stay of your impending car loss is possible with the filing of either a Chapter 13 or Chapter 7 bankruptcy. It's not an easy decision, but losing your vehicle may mean you can no longer work or seek employment.
If you don't pay your deficiency, a Missouri creditor has up to five years to sue you under the state's statute of limitations regarding debts. It could be worse -- in neighboring Kentucky, it's 15 years.