Auto Repossession Default Primer Part Two

Auto repossession default

RepoMen aka The Repossession Mambo (Photo credit: Fried Dough)

Auto Repossession Default Primer Part Two

This is the second part of an article published  on November 8, 2012 called “Auto Repossession Default Primer.”

Auto Repossession Default Primer Part One was published on 11/12/12.

Auto Repossession Default is most often done by the voluntary surrender of the vehicle when the debtor knows that losing the vehicle is inevitable and chooses not to fight it. It is better for your future to cooperate if you have no other options.  Be aware that it will haunt your auto purchases for a long time.  Let us begin this phase of our discussion of Auto Repossession Default with a look at the two ways in which repossession can be legally accomplished:

Judicial Process

Some states require auto repossession default to be accomplished through judicial process or court order.  Depending on the state in question the legal theory may be “claim and delivery,” “replevin,” or “attachment.”  As a general rule court ordered auto repossession default is deemed commercially reasonable, but the process is expensive and time consuming.  That expense is ultimately born by the consumer.  Many states require a creditor to send a notice of default with an itemized bill and a “right to cure” the default, usually within 5-20 days.  This requirement is usually strictly enforced.  If the creditor fails to do this it can become a weapon in the defendant’s favor in the event of legal process.

Replevin requires the dealer to submit an affidavit in support of a legal document to be obtained from the court called a “writ of replevin.”  This document gives the sheriff the legal authority to seize the vehicle by force if necessary.  After the seizure the sheriff turns the vehicle over to the creditor.  This is not the end of the story.  The creditor must now win a judgment on the underlying installment contract against the debtor before he can auction the auto off.  This gives the consumer more time to assert defenses such as breach of warranty if he wants.  Courts sometimes use their discretion during this time period to grant the consumer reasonable time to “cure” the defect (pay up).  Another out for debtors, highly unlikely in most cases, is to post a bond payable to the secured creditor of double the amount of the present value of the collateral.  There may also be competing lien holders to consider.

“Self Help” Repossession

The second more common method of repossession is the “self help” method.  Most state statutes as well as UCC 9-503 authorize repossession of a vehicle without judicial process and pursuant to the contract if it can be done without “breach of the peace.”

If the repossessor during the actual attempt to repossess the vehicle uses oppressive conduct, threat of force, implied threat of force or engages in a  confrontation it can be construed as a “breach of the peace.”  The original security agreement usually contains a provision giving the dealer a right to enter onto private property to effect repossession.  The agreement should contain a provision requiring a debtor to surrender the vehicle at a specified time and place after notice.  Exactly what may constitute “oppressive conduct” is a matter for judicial discretion.

The right of self help implies a limited privilege to enter onto a debtor’s private property.  Vehicles are often repossessed from the debtor’s open garage, private driveway, public street, parking lot or repair shop.  If the repossessor has the vehicle hooked up and is ready to drive off with it and the debtor demands he unhook it the repossessor must comply. The general rule is that a debtor’s request for a repossessor to leave a car alone must be obeyed.  The repossessor may not enter a closed garage or other building or structure on a debtor’s property.  Breaking a lock on a garage door will constitute a breach of the peace.  Prevention of violence is the underlying public policy for auto repossession default.

Breach of the Peace

If the dealer breaches the peace or if the buyer is not in default the dealer exposes himself to tort liability for conversion.  Punitive damages may be assessed where circumstances surrounding the conversion show fraud, malice, deliberate violence or oppression, recklessness or gross negligence.

If the debtor has personal property in the vehicle the repossessor is deemed a constructive bailee and has a duty to keep the items safe.  If the items are returned the debtor may have a claim for loss of use or damages.  The repossessor should send the debtor a list of items found and tell the debtor whom to contact to make arrangements for their return.

Bankruptcy filing will constitute an automatic stay against the creditor whether or not the creditor has notice or actual knowledge. Lenders have to get permission of the court to repossess if you are behind on your payments.  As soon as a bankruptcy petition is filed in federal court an estate is created which consists of all legal and equitable interest the debtor has in any property.  This automatic stay stops the efforts of all creditors to collect any claim against the debtor including any acts to obtain possession of the property of the estate.  If you can show you need the vehicle for work or medical appointments you may avoid repossession.  You may have to renegotiate and/or catch up on your payments.  You also could possibly buy the vehicle at fair market value.  Do not attempt to navigate the shark infested waters of bankruptcy without the services of an attorney who concentrates in this area!

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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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