What can I do about a possibly illegal car contract?

UPDATED: Jun 6, 2011

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What can I do about a possibly illegal car contract?

The car was repossessedfor being 11 days late and the note was paid the day it was repoed. Now they want the full amount of the loan. The contract says you are in default if you don’t pay when due, even if you die you still owe the note. It also says that you are in default if you file bankruptcy. Is that right?

Asked on June 6, 2011 under General Practice, Mississippi


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

This might not be an illegal contract:

1) Loans have to be paid when due; failing to make a payment in full on time IS default, and the company may take action, such as repossession. Furthermore, it is legal for the note or loan/financing agremeement to have an acceleration clause--that is, it all comes due when there is a default.

2)  A loan may have a clause that it must be paid in full, by the estate, on the death of the borrower.

3) A loan also may make--and commonly does make--various actions, such as filing for bankruptcy, constitute default, such that the lender can seek repossession and/or payment of the remaining balance. Of course, this does  not override the provisions or protections of bankruptcy law, so the borrower may be able to get a stay of collections, etc.

Short answer: a loan is a contract. It can have more-or-less any terms that are included in it, and not paying according to the terms, including when a payment is due, is a violation or default.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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