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Can Secured Creditor Obtain Vehicle from Police?

Question: The police impounded my car and gave it to my bank. The car had not yet been paid for. The bank sold my car at auction without my authorization. Can I sue the bank?

Answer: Not for that. All security agreements define the seizure of the collateral (the car) by law enforcement authorities as an act of default, whether or not you are at fault. If it is seized and you do not immediately obtain its release, the bank has the legal right to treat you as having defaulted and repossess and sell the car. You are entitled to notice of the proposed disposition, notice of the application for a repossession title, and if you have paid over 30%, notice of your right to cure the default and get the car back (curing the default in this context would require elimination of the claim of the law enforcement authorities through payment or legal proceedings, and may not be possible at all). However, when you signed the note or retail installment contract, you almost certainly authorized the bank to do what it did.