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Q

My car was repossessed because my insurance was not paid for the month of May. I have never missed, or been late for a payment, nor insurance before. I have well over $3000 invested in the car in audio/video. I received a letter in the mail stating that I can pick up my unpledged items. What is an unpledged item?


A

A general definition of repossession is the process of a lender, or their hired agent, taking back items that were bought on credit or were pledged as collateral for a loan from a borrower who has fallen behind on loan payments. Or in your case you have broken other terms of your loan or lease with your lien holder it appears by not having the required auto insurance in place.

This act is done in accordance with a purchase contract or credit contract, in which the consumer agrees that the seller may repossess the object if the signers are past the grace period on their payments, have broken the terms of the loan or lease, etc.

Normally a repossession occurs when the buyer has defaulted in the performance of any obligation under the contract they have with a lien holder. Ordinarily a default occurs when an installment payment is delinquent. However, if the consumer is required by the contract to maintain insurance, a failure to do so may constitute a default, as allowing the collateral to be jeopardized, which it appears occurred in your present situation.

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Repossession is a complicated matter, with legality being determined by widely varying local and state laws. Though state laws vary, usually a repossession agency will be required to make an inventory list of all personal belongings they found in the vehicle at the time of the repossession and send a notice to the car owner informing them of how to recover these personal items. It is likely these personal items that the repossessor is referring to as "unpledged items" in notice you received in the mail.

The pledged item would be the vehicle since it the collateral and still the property of the lien holder since you have not paid for the vehicle in full yet. State laws differ, as do financial contracts, however items such as stereos, audio systems, custom rims, and the like which are installed as permanent items on a vehicle (pledged item) generally stay with the car when it is repossessed and not returned to the person that was paying on the vehicle.

When your vehicle is repossessed you normally are entitled to get back your personal items as long as they were not physically attached to the vehicle. In other words, you are entitled to any clothes, books, CDs, laptops, or the other personal belongings you left in the car, but the audio/video system that you installed is now more than likely the property of the lender.

We have read that in some cases if you had uninstalled the system prior to repossession you could have kept it. Again this depends on state laws and the terms of your finance contract with the lender. Likely if you were allowed to keep the system if you have uninstalled prior to the repossession of the vehicle then the factory stereo would have needed to be reinstalled.

To find out exactly what the repossessor is referring to as "unpledged items" contact the repossession agency directly. Either the repossession agency and/or your lien holder should be able to advise you on if you will be able to get any of your audio/video components or if they will remain with the vehicle now.

If you are able to get your car returned to you by obtaining and maintaining auto insurance on it, you can get instant car insurance quotes here with us.


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