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Repossession Relief

Repossessions Happen to Good People

Car repossessions happen to good people. They are very common. They are on the rise. Many occur because the car is a lemon or the seller has otherwise violated the law. You may have your own claims. If you know your rights, you can often turn the tables. The bank may owe you. Many people do not know they have their own claims or a valid defense until they have a lawyer review their paperwork and all of the circumstances surrounding the purchase. At the very least, you can often minimize the harm to your pocket-book and to your credit rating and credit reputation.

What is Repossession?

Most cars are purchased on credit. Until the buyer makes the last payment, the seller/creditor retains the right to “repossess” (take the car back), if the buyer “defaults.” The buyer’s and creditor’s rights are spelled out in the finance purchase contract and state law. Typically, the buyer/debtor is obligated to make monthly payments and to maintain insurance on the vehicle.

You Can Turn the Tables

The creditor may not have the right to repossess the car in the first place. Under state and federal law, the creditor is responsible for the seller’s wrongdoing. If the seller tricked the buyer, if the car was defective, if the seller misrepresented any significant fact, if the seller did not fully or accurately disclose the car’s prior use – among other possibilities --, then the contract may be unenforceable. Not only may the creditor not repossess the car, but the bank may be responsible for paying the buyer for any harm caused by the seller’s wrongdoing.

Creditors May Not Breach the Peace

Creditors may not breach the peace when repossessing the car. They cannot enter your home or garage or stay on your property without your permission. They cannot use force or threats of force. If the creditor has to go to court to repossess, this might increase the final cost to you.

If the repossessor does any of the following, then you may have a worthwhile case to pursue against the reposessor and the bank:

1. Insults or disrespects you in any way
2. Physically touches you in any unwelcome way
3. Refuses to stop the repossession upon request
4. Refuses to leave your property
5. Enters your property against your prohibitions
6. Enters any enclosed area of your property without express permission
7. Enters any dwelling without express permission
8. Threatens you physically
9. Threatens to call the police
10. Calls the police
11. Damages your property
12. Damages your vehicle
13. Misrepresents anything, like for instance having a Court Order
14. Discloses any personal information to your neighbors, like for instance they are trying to collect a debt or repossess your car

What is a "Voluntary Repossession?"

"Voluntary repossession" means that you give the creditor your car. Don’t be fooled. The only advantage is that you may not be charged a “repossession fee.” You probably will still owe the creditor money. It will still appear on your credit report. If the creditor says that you won't owe anything, or that it won’t appear on your credit report, make sure to get these promises in writing.

Modifying the Contract

If your creditor has agreed to accept your late payments or to change your payment date, the terms of your original contract may no longer apply. Changes may be made orally, in writing, or simply by accepting a late payment. The creditor can’t agree to accept your payment and not to repossess and then go ahead and repossess.

What Happens After Repossession?

Creditors usually will resell the car. The sale price will be applied to reduce the amount of money that you still owe. You will be responsible for the remainder plus reasonable repossession and reselling charges. The sale may be public or private, but must be conducted in a commercially reasonable fashion. You may be able to reinstate the contract by paying the overdue amount, or the full-balance, and other charges. Personal property contained in the vehicle must be kept available for return for 30 days.

Is Prior Notice Required?

Prior notice is not required before repossessing a vehicle other than a mobile home. Immediately after repossession, creditors must deliver a notice in person or by registered or certified mail, which identifies the debtor, the vehicle, the location of the vehicle, whether and how you have the right to reinstate the contract, the time, place and manner of resale, an itemized statement of amounts owed, including any repossession charges, and a list and the location of personal property contained in the vehicle (which must be kept for 30 days). The notice must be sent no less than 15 days before the date of resale.

Resources

• Motor Vehicles Sales Finance Act Statute (PDF)
• UCC: Uniform Commercial Code (http://www.law.cornell.edu/ucc/ucc.table.html)

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