Default

• Default occurs when a consumer stops making the payments as agreed in their loan contract. When a loan contract is signed, the consumer agrees that the creditor can repossess the vehicle if the payments are not made on the scheduled dates. In Tennessee, the creditor is not required to obtain a court order to repossess the vehicle. If payment is missed, the creditor has the right to contract with a repossession service to tow the vehicle.
  
  

Perfection

• In the pursuit of recovering the vehicle, the creditor is required to perfect the lien. In order to perfect the lien, the creditor must bring the certificate of the title to the county clerk's office. Ideally, the title should be delivered to the county where the sale of the vehicle occurred. Along with the title, the creditor must include a title extension form, application for certificate of title and statement of origin. The forms can be downloaded from the Tennessee Revenue Department's website.
  
  

Recovery

• As long as peace is not breached, the creditor and repossession contractor are protected by the law. Peace is considered to be breached if the car is removed by force or if trespassing laws are violated in the process of recovering the vehicle.
  
  

Resale

• If the creditor successfully repossesses the vehicle, they may resell the car in order to recover money lost through recovery efforts. Tennessee law requires the vehicle to be sold at a public or private auction if the consumer has paid 60 percent or more of the loan's principal. In order to be aligned with the law, the creditor cannot resell the vehicle below the market value.