The repo man cometh: the real deal on vehicle repossessions.

With loan terms being extended and monthly car notes increasing, many already overextended consumers are falling deeper into debt--almost $2 trillion in outstanding consumer debt to be exact. Auto loans rank second only to a homeowner's mortgage and an apartment renter's credit card bills, according to Federal Reserve data. Although the number of new vehicle delinquencies decreased to 1.58% in 2003 according to the Consumer Bankers Association's 2003 Automobile Finance Study, fall behind in your car payments and the possibility of a visit from a repo man becomes reality.

When Renee Taylor (not her real name) of Fayetteville, North Carolina, and her husband were shopping for a home 10 years ago, a mortgage officer at the now-defunct Home Federal Savings & Loan Bank suggested Taylor voluntarily give up her 1985 Nissan Sentra to lower her debt-to-income ratio. Making only $18,000 at the time, Taylor complied. "Although the bank was able to recoup the full value remaining on the car when it resold it, there was no distinction between me handing back the ear on my own accord and them repossessing it," she says.

That's because whether you voluntarily return your car to the lender or it is repossessed, you are responsible for the lender's loss on the car and any fees covering that loss. Once repossessed, your car can be sold at an auction, for an amount that does not cover the balance of the loan. In that case, you must pay the difference between what the lender gets after selling the car and the amount owed on your contract, also known as the "deficiency."

The creditor may then file a lawsuit, obtain a deficiency judgment, and try to recoup the difference by acquiring your other assets, such as bank accounts, and may even garnish your wages. Although credit reporting agencies differentiate between voluntary and involuntary repossessions on their reports, it won't make a difference when you apply for new credit. The repossession stays on your report, for seven years.

"Business is definitely on the increase despite what people are saying about the economy. We stay pretty busy," says Ernest Sambrano, operations director for Global Recovery, a collateral repossession and bail enforcer company based in Phoenix. "We work 24 hours, seven days a week, 365 days of the year," adds Sambrano, who has as many as 40 agents working on a daily basis.

In as little as 60 seconds, gun-toting recovery agents--aware of the possibility of an argument, physical violence, or, in a rare situation, death--can use a hydraulic-lift system equipped with surveillance cameras to remove a car from your driveway without ever leaving their vehicle. This method is said to decrease the risk of confrontation.

In many states, the lender can repossess your car without as much as a telephone call or written notice if you fall behind on one monthly payment. The repossession company can hot-wire your car and drive it away from any location, as long as it doesn't illegally enter your locked garage or physically threaten you.

You may be entitled to buy back the vehicle if you pay the full amount owed plus any expenses connected with its repossession, such as storage and preparation for sale. If you don't have the full amount, the law in some states allows you to reinstate your contract and reclaim your car by paying the outstanding amount you owe, as well as repossession and related expenses such as attorney fees. If you reclaim your car, you must meet the terms of your reinstated or renegotiated contract.

For more tips, contact the Federal Trade Commission (www.ftc.gov/bcp/conline/pubs/autos/carrepo.htm; 877-382-4357) and log on to the Consumer Action Website www.pueblo .gsa.gov/crh/caw_cars_buying_new.htm).

PREVENTING VEHICLE REPOSSESSION

1 Communicate with your lender if you think you will be late with a payment. But do so before the payment is due to maintain the most leverage. Typically, lenders are willing to work with you.

2 Assess whether your inability to pay your car note is temporary or long term. If it's temporary, work out a short-term solution with the lender, like adding the missed payment to the end of the loan term or deferring note over three months.

3 Negotiate for some time if your inability to pay is long term. Then try to sell the car yourself and use the proceeds to pay off your car loan. Keep in mind, the lender has to release the title in order for you to transfer ownership.

4 Arrange to pay some of the note for a period of time or ask for a deferment of the note. If you reach an agreement to modify your original contract, get any revised schedule of payments in writing.