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Vehicle Repossession and Breach of Contract Lawsuit

Vehicle repossession is not “debt law” in the sense we mean it at our site.

If you’ve read many of our materials, you know that we consider debt law as good as it gets for self-representation. That is because debt buyers buy vast quantities of debt and essentially take a “factory” approach to bill collecting and lawsuits. You can expect pretty much every case brought by a debt buyer to follow a similar approach – the petitions are almost always virtually identical, and the whole process is usually shoddy. Typically, the debt collectors don’t have what they would need to win a contested fight – and they don’t want to get what they would need to win because they are designed to catch the 80 – 90% of the people who do not fight.

And debt cases are “document-intensive,” meaning that the debt collector’s whole case will usually depend on getting some documents into evidence.  There is very little testimony and no expert witnesses. So that means a pro se litigant can focus on a few simple evidentiary questions and not worry too much about arranging testimony or other trial tactics.

But our materials do not apply to vehicle repossessions and the surrounding issues. Those cases present a different set of issues and opportunities.

What is a “Vehicle Repossession?”

When you buy a car on credit, you will typically sign a contract agreeing to pay a certain amount per month (plus a variety of other terms, obviously). And these contracts and their terms are, in general, a terrible, terrible deal for the customer. One of these terms is a lien and right to repossession, and there is a whole body of somewhat specialized law on all of the repossession process.

If you fail to make payments, the company may have installed tracking and disabling devices in the car – so the car may stop working. And then the repo guys come and get the car. And then the REAL scam begins.

When dealers repossess a vehicle, they are not “collecting a debt.” They are, in legalistic terms, exercising their liens and cutting off your right to a security. It looks like a collection, and it is one, but the law of most jurisdictions does not see it that way.

Still, the idea is for them to get their money back, and what they plan to do is sell the vehicle at an auction.Early in the process, then – before they get your car – you can talk to them and negotiate terms more effectively than later.

Once they get your car, they will want to sell it. If they do this in a “commercially reasonable” way, you will be on the hook for whatever amount of your car note remains. And inevitably, this is a shocking amount. For various reasons (some good and some bad) the courts are extremely lenient as to what constitutes “commercially reasonable.”

But the fact is that the dealers get almost nothing for the cars they repo. They sell them to each other, at auction, so this is one of the all-time scams – and the courts wink at it. In any event, repossession law focuses extensively on this question of “commercially reasonable” and on certain notice provisions. State laws in this area are complex for most people, and the court decisions are not easy to understand.

And the car dealerships have stacked the deck in most cases. Their lawyers specialize in this law, know the facts of the cases they bring (much more than debt collectors, anyway), and will almost always have the contract you signed. They’ll have people who can swear to them, too, because most car dealerships are built around the repossession process.

This doesn’t mean you don’t have a chance to win. It just means that this isn’t the best kind of law to go pro se. Fortunately, if you are broke, most of the legal service organizations that help people without money are good at this. It’s a problem a lot of people with money problems have. We suggest you find one of these places – many law schools have clinics that do this, too – and see if you can get help.

If you can’t do that, it still makes sense to fight, and on a simple dollar basis, joining us to help you do that will probably be worth your money. Your chances of winning aren’t great, but they do use a factory approach, and some of our tools will apply to that. And by fighting you can reduce some of the damage they will do to you.

Repossession and Suit to Collect the Difference Happen Fast

Unfortunately, vehicle repossession cases can happen very quickly. Our advice is to make every effort to find help. Filing an answer by yourself could very well hurt your case. If you must do it by yourself, our membership can give you SOME help – and in that case you simply must join and talk to us before answering the suit. Trying to represent yourself without any help is just not a good idea.

Our Case Evaluation Service

One of the services we provide to members and non-members alike is a “case evaluation.” It’s a great deal for people being sued by debt collectors who would like some guidance about their case. We do not recommend this service for people facing vehicle repossession, though. If you send us one, we will have to spend the time to figure things out (so we will keep your money for the time we must spend) – and then we’ll almost certainly give you pretty much what we say here. Save your money and your time and look for a lawyer who can handle this case for you.

Secret Danger of Garnishment to Social Security Recipients

As I have pointed out in my video about garnishing Social Security, Social Security benefits are exempt from most forms of garnishment – the notable exception to that rule is that they may be garnished by certain government entities.

Although Social Security benefits are exempt from most forms of garnishment, I warned that they could still be attached and taken if they are in a bank account that the creditor happens to find. When bank accounts are garnished, they are held by the bank for a time to allow you to fight the garnishment. As a practical matter, you may be unable to fight the garnishment, and thus if you are having trouble paying your bills and have paid for them with an account that holds Social Security benefits, it makes very good sense to switch those benefits to another bank (not just bank account in the same bank) – because once there is a judgment against you the debt collector is bound to attempt to seize any assets in a bank they have on file for you. I realize this can be difficult or disruptive, but if you have paid an original creditor or debt collector out of an account, you must expect that account to be garnished – seized and taken away from you – if the debt collector manages to get a judgment.

If it is seized, you may or may not be able to get the money back, but there will certainly be a delay, and all the money in the account, up to the amount of the judgment, will be held by the bank and unavailable to you.

There is another danger to Social Security recipients.

Social Security recipients are often elderly or disabled, needless to say, and many of these allow other people to do shopping for them or to hold their assets in one way or another to use for their benefits. This money is held in trust and should not be available to debt collectors who are after the person who is holding the money.

Here is an example that might make it clearer. If Mary (a 70 year old woman suffering from Altzheimer’s) is being taken care of by her son Tom, Mary and Tom will frequently find it helpful to allow Tom to use Mary’s account to pay her bills. If Mary’s account contains only Social Security benefits, it should be beyond the reach of any creditor, and because the money is not Tom’s at all, it should not be reachable by Tom’s creditors in any event.

However, sometimes debt collectors will discover that Tom is paying bills using Mary’s account. If his name is on the account, or if he is permitted to write checks upon it, the debt collectors may attempt to garnish the account.

This is not as “evil” as it may first appear. From the debt collector’s point of view, how do they know what bills Tom is paying with the account? People have often tried to hide assets from debt collectors by using other people’s accounts, and the law is designed to let go after the debtor’s money regardless of whose name it is.

On the other hand, the impact of Mary’s account being seized for Tom’s debt can be devastating. Because once again the money will be held out of use for a period of time that allows the parties to prove whose money it is and whether it can be seized. During that time, the elderly person cannot pay her bills, may be evicted, or face other, life-threatening and disrupting events.

Get Legal Advice

Therefore, if you have a judgment against you on a debt you should seek the advice of a lawyer specializing in debt collection before allowing the account to be linked to you in any way. In my opinion, the risk extends beyond just having your name on the account. If you sign checks on behalf of someone else and there is a judgment against you, you may be putting this person at risk. Get legal advice and protect them and you. Better yet, don’t let a debt collector get a judgment against you.

Protect Your Rights

If you are being harassed by debt collectors and worry about paying your bills, you need to be extra alert to protect your rights. These calls are often a prelude to their suing you. Bankruptcy can sometimes be an option, yet it has very high costs. It’s worth considering defending yourself first. Membership with our site gets you our teleconferences and ecourses for free, plus gives you many other benefits. Click here for more about debt law and how we can help you.