Wrongful 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.
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.
-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.
Co-signing a Loan: It’s Risky Business
Borrowers need credit approval
A prospective borrower with a history of late payments or a lack of credit history may need a co-signer to obtain approval for a loan. The co-signer’s good name and credit history are used to help the borrower get approved.
Equal Responsibility for the Loan
The co-signer and primary borrower hold equal responsibility for the signed auto loan. When payments are late or missed, the lender has the right to repossess the vehicle. Negative listings will appear on the credit files of both the borrower and the co-signer.
Obligation to Satisfy the Deficient Balance
The lender may contact the co-signer, and/or the primary borrower, after a vehicle has been repossessed. If the borrower can not satisfy the loan, the lender will look to the co-signer to pay. Both the borrower and co-signer may have late payments and the repossession listed on credit reports. As well, their credit scores may drop, making it difficult to obtain new credit.
Responsibility transfers to co-signer after default
The responsibility to meeting the terms of the loan generally transfers to the co-signer after primary borrower passes away, loses a job, goes through a divorce, files for bankruptcy, or fails to make scheduled payments.
Auto Repossessions: Know what to Expect
Financial hardships can make it difficult to keep up with car payments.
-Reduced Work Hours
Even after months of struggling to make payments, the borrower is often caught by surprise when the repo truck arrives.
Before an Auto Repossession
If you’ve fallen behind on payments, the lender may decide to repossess your vehicle. If you anticipate a repossession, evaluate the items in your vehicle. Remove all documents and personal belongings. Although personal property can be retrieved after repossession from the repo lot, items may go missing or be damaged in the process of repossession.
Take steps to protect your possessions:
-Remove all important car purchase and finance documents from the vehicle
-Remove all personal items – car seats, laptops, medications, handbags, etc.
-Note the mileage on the vehicle
-Photograph or Video the condition of your vehicle interior and exterior.
During the Auto Repossession
Make note of facts related to the repossession event. You may want to videotape or photograph the scene.
-Date and time
-Repo Company Name
-Police Officer names & badge #
After the Auto Repossession
The lender is required to provide notices to the borrower after repossession and sale of the vehicle. These notices are called:
Notice of Intent to Sell Property
The first notice confirms the vehicle was repossessed and informs the borrower of the amount owed and terms to retrieve the vehicle. It will state the vehicle’s location for retrieval of personal property. If the borrower can not meet the terms, the lender will sell the vehicle at an auction or private sale.
When the borrower is not able to retrieve the vehicle and the lender sells it, a second letter is sent to the borrower. It confirms the selling price of the vehicle and calculates any remaining balance owed to satisfy the loan, including charges for storage and the auto repossession fee.
Important Auto Purchase and Loan Documents
Gather all documents related to the purchase, financing and repossession of the vehicle. These documents will be helpful for an attorney to review the repossession for a potential violation of your consumer rights.
-Loan Agreement or Retail Installment Sales Contract
-Loan Payment History from the Lender
-Payment documentation (canceled checks, money orders, etc.)
-Buyer’s Order or Car Purchase Agreement
-Police Report (if the police were involved)
Collection of Deficient Auto Loan Balance
The lender may attempt to collect the deficient balance from the borrower or assign the collection to an agency or collection law firm. If the debt is not collected, the lender may choose to file a lawsuit against the borrower.
If you have been sued, do not ignore it. A default judgment could be entered against you. Judgments are dangerous and enable the lender to attempt collection through bank attachments, seizure of property, or in many states, wage garnishment.
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.