Understanding Consumer Law

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We hope the articles below help you understand your rights as a consumer. You can scroll through the titles, or sort by Practice Area or Topic. You can also use the search feature to locate information by keyword.

Flitter Milz represents people with a variety of problems involving consumer credit and collections. If you have a particular question or believe your consumer rights have been violated, Contact Us for a no cost consultation.

Car Repossession

Are there Advantages to a Voluntary Repossession?

While most repossessions are initiated by the lender, sometimes it’s the borrower that decides to voluntarily surrender his or her vehicle.  Whether or not, after a repossession it’s important for the borrower to understand his or her financial responsibility to satisfy the loan once the lender has taken possession of the vehicle.

Surrendering Your Vehicle

The choice to voluntarily surrender your vehicle is not easy decision. Borrowers understand that the lender has the right to repossess the vehicle if they can’t meet the terms agreed upon in their auto loan agreement.

After payments are missed or late, the lender could come to take the vehicle at any time of day or night. Repossessions are stressful and usually occur at the most inopportune times.

Often, borrowers faced with the possibility of repossession may choose to voluntarily give their car back. A voluntary repossession allows the borrower to have some control and address financial troubles in a less stressful manner, and without the shock of finding the car missing.

Ten Advantages of a Voluntary Repossession:

1. Arranged return of the vehicle – date, time and location
2. Removal of all personal belongings from the vehicle
3. Removal of all important documents from the vehicle
4. Removal of the license place
5. Photograph the condition of the vehicle – interior & exterior
6. Take odometer reading to know precise mileage on the vehicle
7. Contact auto insurance carrier to inform of the voluntary repossession
8. Deliver the vehicle and keys to a convenient location
9. May not have to pay a repossession fee
10. May not have to pay storage fee

Voluntary Repossession Will Not Cancel Your Loan

A voluntary repossession does not dismiss the responsibility that the borrower has to satisfy the loan.  The financial obligation and collection process from a voluntary repossession are the same as a regular repossession.

First, after taking back the vehicle, the lender will send a repossession notice, or Notice of Intent to Sell Property, to the borrower. This letter states the location of the vehicle, terms to get the vehicle back, where to retrieve personal property, and where and when the vehicle will be sold.

Second, once the vehicle has been sold, the borrower will receive a letter called a Deficiency Notice.  This notice informs the borrower of the selling price of their vehicle and shows the calculation of any remaining balance owed on to satisfy the loan.

Collection of the deficient balance may be handled by the lender’s collection department, or the lender may assign this task to a third-party collector. If the collector is unsuccessful in collecting the balance, the lender may choose to file a lawsuit against the borrower to collect this balance.

Repossession and Your Credit Report

Both voluntary surrender and lender-initiated repossession carry negative weight on a credit report.  It’s not just the repossession that is listed on credit reports, but also, the missed or late payments that may have led to the repossession in the first place.

These negative listings can remain on your credit report for up to seven and one-half years, jeopardizing the ability to obtain another auto loan, or one with favorable credit terms.  In addition, repossessions could have other negative consequences such as creditors raising interest rates, the reduction of credit limits, or an overall drop in credit scores.

Seek Legal Help After Repossession

Flitter Milz is a nationally recognized consumer protection law firm that pursues matters against banks, credit unions and financial institutions for the wrongful repossession of cars, truck, motorcycles, RVs and boats.  Contact Us for a no cost legal evaluation to determine whether your consumer rights have been violated.  Pictured:  Cary Flitter (center), Andy Milz (left), Jody López-Jacobs (right)

 

Understanding Vehicle Repossession and the Impact on Credit

The hard facts about Repossession.

We all understand that when you borrow money, you need to pay it back. And if you take out an auto loan, whether it’s with a bank, credit union or other financial institution, if payments are late or missed, the lender has the right to repossess the vehicle.

Signing a loan agreement means that you agree to the terms to repay the money borrowed, plus any interest and fees, within a scheduled period of time. Opting to finance a vehicle is an important decision and carries significant responsibility and financial discipline.

Short Term v. Long Term Effects of Repossession

When the borrower defaults on an auto loan there are serious consequences. Immediately, daily life becomes upset without use of the car.  Getting to work or handling routine daily chores, such as food shopping, taking children to school, or attending doctor’s appointments, may present difficulties for the household.

But more important is the long-term consequence. Repossessions can remain on credit reports for seven-and-one-half years, beginning from the date that the account first became delinquent.  And, as long as the repossession stays on your report, it can seriously damage credit and impact the calculation of credit scores. Also, negative listings on credit reports may make it more difficult to secure new loans, and existing creditors could alter credit terms by lowering credit limits or increasing interest rates.

Factors that can Damage Credit

  • Late payments – every month a payment is missed a negative mark appears on the account’s payment history.
  • Defaults – Loan defaults carry negative weight.   i.e. charge-off or repossession.
  • Collections – Collection accounts appear as negative listings on credit reports.
  • Court Judgments – Unsuccessful collection attempts, lead to lawsuits against the borrower to obtain a judgment.

Factors Contributing to the Calculation of a Credit Score

  • Payment History – Timely payments made to an account
  • Credit Utilization – The ratio of available to used credit
  • Age of Credit – The length of time an account has been open
  • Types of Accounts – A consumer’s credit mix: mortgage, credit cards, loans, etc.
  • Application history – The number of credit applications submitted within a specific period

Legal Protections from a Wrongful Repossessions

Whether or not the borrower defaulted on the terms of the auto loan, State and Federal laws govern how lenders and repo agents are to handle repossessions properly– at the scene and afterwards. When the borrower’s consumer rights are violated, a case could be pursued against the lender, repo agent or both. Repo agents may not threaten the borrower or use physical force.  In the course of repossession, the borrower’s vehicle or property is not to be damaged.  If police are called to the scene, their job is to keep the peace, not assist with the repossession.  If personal items have been left in the repossessed vehicle, the repo agent must permit the borrower to retrieve those items.

AFTER the Repossession

Following the repossession the lender has responsibilities to the borrower.  They must provide notices that inform the borrower with steps to retrieve the vehicle and their personal property.  Once the vehicle is sold, the lender must inform the borrower of the selling price and present a calculation of any remaining balance owed to satisfy the loan.

Manage Auto Loan Payments and Credit Reporting

Monitor Credit Reports for Errors
Over the course of the auto loan, borrowers should monitor their Transunion, Experian and Equifax credit reports for accurate reporting. If incorrect information is listed, such as a late payment history, a dispute letter should be sent to the lender and the credit bureau to request correction on the report.  

Send Effective Disputes
Disputes letters must include documents that show the error, such as cancelled checks, account statements, correspondence with the lender, etc. Also, the dispute must clearly state the requested action,  an update, correction or removal of the information.

Keep Accurate Payment Records

As important as it is to make payments in full and on time, we can’t always rely on the lender to keep an accurate record of payments.  Sometimes mistakes are made. Incorrect payment amounts could be applied to the borrower’s account, or the payment could be applied to someone else’s account.  Borrowers that manage and keep accurate payment records have good documents to support disputes made to the lender and/or credit bureau.

Seek advice from a Qualified Repossession Lawyers

Flitter Milz is a nationally recognized consumer protection law firm that represents consumers in matters of wrongful repossessions and credit reporting accuracy and privacy disputes. When errors remain on credit reports after a dispute, Contact Us for a no cost legal review to determine whether your consumer rights have been violated.  Pictured: Cary Flitter (center), Andy Milz (left), Jody López-Jacobs (right).

Dangers of Co-Signing an Auto Loan

Being asked to co-sign a loan for a family member or close friend is a larger responsibility than most people realize.  When you co-sign a loan, such as an auto loan, you and your credit are on the hook if that relative or friend decides to stop making payments on the loan.  In other words, by co-signing, you are a co-borrower and must accept responsibility of terms stated in the loan agreement.

Risks of Co-Signing

There are inherent risks associated with co-signing an auto loan for someone else. Usually, when someone approaches a relative or friend about co-signing a loan for the purchase of a vehicle, it is because that individual, or co-borrower, does not have good enough credit to qualify for the loan on his or her own.

When you agree to co-sign an auto loan, if anything goes wrong, you will be subject to the terms of the loan and responsible to satisfy any balance owed.

The vehicle could be repossessed.
If the co-borrower does misses payments on the auto loan and the vehicle is repossessed, the lender will approach the co-signer to furnish past due payments, or possibly request payment of the entire loan balance.  If the co-signer can not meet the terms, the vehicle would be sold at an auction or private sale.  Afterwards, the lender will seek payment of any deficient balance owed to satisfy the loan.

Additionally, when proper insurance is not maintained on the vehicle, the co-borrower may be in breach of the auto loan agreement. This type of breach could pave the way for the lender to repossess the vehicle, causing additional harm to the both co-borrowers credit reports and credit scores.

You Could Be Sued.

Once the vehicle is sold, the lender may assign collection of the deficient balance to a debt collector or law firm collector.  If the loan balance is not paid, the lender could choose to sue the co-borrowers to recoup funds owed on the outstanding balance.

 

 

The Occurrance of Unexpected Life Events
Equally important, the loan agreement may state terms  if unexpected life events were to occur.  In these situations, the lender may look to the co-signer to fulfill the terms of the outstanding auto loan agreement. Be sure to read the loan agreement carefully and understand your obligation.

      • Divorce
      • Loss of employment
      • Filing for bankruptcy
      • Death of Co-Borrower

Impact on your Credit — Understand your Debt-to-Income Ratio.
Co-signing a loan should not be taken casually. The co-signer must consider whether or not credit may be needed for him or herself.  If a co-signer has too much debt in relation to income, he or she may be viewed as a high risk for a new loan. The lender may either decline the new loan application or offer unfavorable credit terms.


Offer Help in Other Ways 


If you truly desire to help out a family member or friend who may simply be unable to secure a loan on his or her own, perhaps you can consider privately loaning the individual the money for the purchase. In other words, you lend the individual the money and they pay you back in installments over time, or whatever agreement the two of you come up with.

Of course, if the loan is for a larger purchase, such as an automobile, you should make sure the friend or relative would be able to pay you back. Whenever you loan money, it’s advisable to get your agreement in writing and indicate the amount borrowed and terms for repayment.

Seek Legal Help

Flitter Milz is a nationally recognized consumer protection law firm that represents individuals in matters against auto lenders, as well as debt collectors and credit bureaus.  CONTACT US for a no cost legal evaluation to determine whether your consumer rights have been violated.

 

 

Resolution for the New Year: Create a Budget and Avoid Credit Problems

Crafting a household budget is not only necessary to help evaluate spending patterns and measure income versus expenditures, but it also helps to ensure a secure financial future.

When an individual’s debt-to-income ratio rises, meaning that the person is taking on more debt than they are receiving in income, dire financial circumstances may occur for that person, and his or her family.

And if debt starts to get out of control and goes on unpaid for a period of time, debt collectors will no doubt start reaching out, your vehicle could get repossessed and credit scores could plummet.

It All Starts With Budgeting

The discipline of a budget helps keep a focus on income and payments towards all financial obligations.  Develop a plan to meet your obligations and protect your credit rating.

1. Obtain Current Credit Reports
One of the first steps toward keeping on top of your financial picture is to obtain current copies of your credit reports from the three main reporting agencies, Transunion, Experian and Equifax. You are entitled to one free credit report every 12 months from each credit bureau.

2. Evaluate Credit Reports for Accuracy
A review of your report will point out any negative entries and possibly errors, which could remain as black marks on your credit reports for up to seven-and-a-half years. These listings may affect terms on existing credit or your ability to obtain favorable terms on new lines of credit. If you discover errors on your reports, dispute the errors in writing directly with the credit bureau.

3. Where is your hard-earned money spent?

If you know how much money is coming in versus going out each month, it becomes less likely that you’ll overspend to the point where payments are skipped or missed. Create the budget that you can stick to with a payment schedule that you can meet.  When you stay in charge of your finances, you decide when it’s time to make a new purchase, whether it be for a home, education, a new vehicle, or another personal expense.

4. Develop a Budget that’s right for you.
It’s all about organization and discipline. Gather all of your paperwork, create files for each account, calendar your payments and focus on meeting your financial goals.  These steps will help you meet your goals.

  • Identify your income sources
  • Compile a list of all expenditures: i.e. rent/mortgage, auto loan, insurance, food, credit cards, etc.
  • Categorize expenses: i.e. essential/necessities versus extraneous/unnecessary
  • Develop a plan to satisfy obligations within a specific time period
  • Obtain current credit reports from Transunion, Experian and Equifax
  • Establish both long and short-term financial goals.
  • Develop a plan to meet your goals.
  • Consider ways to earn or save more to help meet your goals

Seek Legal Help

Flitter Milz is a nationally recognized consumer protection law firm that represents victims with consumer credit problems, such as credit reporting accuracy and privacy issues, abusive debt collection tactics, wrongful vehicle repossession, which stem from over-spending. If you have errors on your credit reports, have received contact from debt collectors, or your auto lender has repossessed your vehicle,  Contact Us for a no-cost evaluation to determine whether your consumer rights may have been violated.

My Car Was Repossessed. What do I need to know?

Woman stressed over car reposession

A vehicle repossession can often come as a surprise.  In many states, including Pennsylvania, the lender is not required to tell you in advance that it will repossess your vehicle.  Often, your lender will attempt to repossess your vehicle in the middle of the night, when no one is around to stop it. The lender’s repo company will then take the vehicle either to a storage lot or an auction.  But how do you know where they took it, and how do you get it back?

Notice of Repossession is Required

After a vehicle repossession, the law requires the lender to send the borrower a specific notice, addressed to the last known address of the borrower.  This repossession notice—also known as the Notice of Intended Disposition or Notice of Right to Redeem—must be mailed immediately or shortly after the repossession. That notice is important because it is required to contain specific information informing you exactly where the car is, how much it will cost for you to get it back, and how much time you have to do so.  If you do not “redeem” (pay the lender to get the car back) the car will then be sold, and the lender will apply the sale proceeds to your loan balance, which usually reduces but does not eliminate your loan balance.

How Much Do I Have to Pay to Get the Car Back?

In many states, including Pennsylvania, the only way to get your car back after a repossession is to pay the entire loan balance, not just past due payments.  For example, let’s say you missed one $300 payment, prompting the lender to repossess your vehicle.  You owe $10,000 on the loan.  To get the car back before the lender sells it, you have to pay the entire $10,000, plus reasonable repossession expenses.

How Much Time Do I Have to Get the Car Back?

You can get the car back at any time before the lender sells the vehicle, even if the vehicle was already taken to an auction.  In Pennsylvania, the lender is required to hold the car for 15 days before it can be sold. But even after the 15-day period, you have the right to get the car back so long as you can pay the entire loan balance and reasonable repossession expenses.  Other states might permit the lender to hold the car for a shorter time period, such as ten days.  But no matter what, you have the right to redeem until the vehicle is sold.

What Happens if I Can’t Pay to Get My Car Back?

Many people do not have enough money to pay the entire loan balance, and the lender will sell the vehicle at a private or public auction.  You have the right to be present at and oversee any public auction.  The lender—in the repossession notice—should have told you the date, time, and location of any public auction if they intend to sell it by public auction.

If the car is sold, then typically the lender will send you another notice explaining the amount you owe after the sale.  This notice—sometimes called an “Explanation of Deficiency,” must itemize specific information about how much you owe, including the principal balance, the sale proceeds, the repossession expenses, and the auction expenses.

Seek Legal Help to Enforce Your Consumer Rights

If your lender did not give you the required post-repossession notices containing the information described above, you might have a consumer protection claim against your lender.  Your right to receive these post-repossession notices apply even if you were in default on the car loan.  If you feel that your lender failed to give you the information required in these post-repossession notices, contact Flitter Milz for a no cost legal evaluation to determine whether your consumer rights have been violated.

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Are You the Victim of a Wrongful Auto Repossession?

Auto repossessionWrongful Auto Repossessions

Auto Repossessions never occur at a convenient time. Without warning, the repo agent may come to take your vehicle. You may be at home, work, out shopping, or visiting family or friends. Even if you anticipated the auto repossession, losing your transportation is frightening.

When a borrower falls behind on payments or defaults on the terms of an auto loan, the lender has the right to repossess the vehicle. The lender is not required to notify the borrower in advance of the auto repossession but will hire a third party, such as a towing company or repossession agency, to locate the vehicle and handle the auto repossession. Before taking the vehicle, the repo agent is to inform the local police department of the auto repossession order.

Repossessions must be handled lawfully
Often, encounters between the repo man and the borrower are tense. Although the lender may have the right to take back the property, the repo agent must handle the auto repossession in a lawful manner. If the repo agent uses abusive tactics while taking the vehicle, the borrower may be able to file suit.

Repo agents must not:

  • Threaten the borrower
  • Use physical force against the borrower
  • Access locked or fenced-in areas without permission
  • Damage the borrower’s personal property or vehicle

The lender may be responsible for the actions of an errant repo agent, whether the borrower missed payments or defaulted on the terms of the auto loan.

Police Involvement

The police may be called to the scene to diffuse a volatile confrontation between the repo agent and the borrower. But there are limits to what the police can do.

Auto repossession

-Police may not facilitate or assist the repo agent in the process of an auto repossession.

-They may not threaten arrest or
command the borrower to “hand over the keys” or “step aside” while the repo agent hooks up the vehicle to take it away.

Keeping the Peace or Breaching the Peace
Police may have crossed the line from keeping the peace to breaching the peace when they assist in the repossession of a vehicle. The borrower’s constitutional rights may be violated when the police become involved. These situations may provide grounds for a lawsuit to be filed against the police department, and possibly the repo agent and the lender.

Seek Legal Help from a Qualified Consumer Lawyer

Flitter Milz is a nationally recognized consumer protection law firm experienced in auto repossession law and the pursuit of cases against banks, credit unions, or financial institutions that violated the consumer’s rights.
Contact Us for a no-cost legal consultation.

 

Can I Be Sued for Not Paying My Car Loan?

Loan Lawsuit with car repossession

The continuing rise in auto loan debt is placing many consumers in a financially vulnerable position, particularly during the current economic downturn. What if you are unable to pay your car loan? Can this lead to a lawsuit? Knowing the process of repossession can both lessen your stress and help you decide the best course of action.

Continue reading Can I Be Sued for Not Paying My Car Loan? →

Understanding Auto Loan Financing

Auto Loan

Cars, trucks, motorcycles, RVs or boats, they’re all expensive.  It’s unusual that these purchases are made in cash.  Whether buying a new or used vehicle, most people choose to finance the purchase and make specified payments over a designated period of time.  Financing can be arranged in two different ways.

Continue reading Understanding Auto Loan Financing →

What Can I do if my Car was Illegally Repossessed?

Car Repossession

Illegal or wrongful car repossession typically means that your lender or the repo agent didn’t follow the proper procedures for repossession your vehicle.  Learning about the rights and wrongs of vehicle repossessions can help you determine whether your car was illegally repossessed.  Both the repo agent and the lender must follow the rules.  Whether or not you missed payments, borrowers have rights against the lender and repo agent when a car, truck, motorcycle, boat or RV is repossessed.

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Can the Police Help with My Car Repossession?

Car Being Towed Repossessed

Borrowers facing repossession may contact the police to have an officer on hand when it’s time to surrender their vehicle. As well, the repo agent may request the presence of law enforcement. But can police assist with the car repossession?

Read on to learn more about the role of law enforcement in the process of repossessing a car, truck, motorcycle, RV or boat.

Continue reading Can the Police Help with My Car Repossession? →