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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.

Foreclosure Fraud

Foreclosure Fraud – Are They Ripping You Off?

As I have argued a number of times, banks seeking foreclosure have been hampered by the “alphabet derivatives” known as “MBS’s” (mortgage backed securities). Often, banks seeking to foreclose on allegedly defaulted mortgages do not own the title to the property in dispute and cannot find it, and therefore cannot (legitimately) pursue their foreclosure actions. It seems that some lenders may have found a convenient way past this objection: systematic fraud.

Fraud in New York

On August 17, 2010, a federal class action suit was filed on behalf of tens of thousands of New York State homeowners who lost their homes to an alleged foreclosure fraud orchestrated for years by a  “foreclosure mill” attorney and major mortgage companies. The case is “Connie Campbell vs. Steven Baum, MERSCORP, Inc, et al.”, Case #10CV3800, filed in the U.S. District Court for the Eastern District of New York. It claims there were various lending and Fair Debt Collection Practices Act (FDCPA) violations and that homeowners paid inflated foreclosure and other fees made up by Mr. Baum on behalf of his clients, the lending institutions.

The alleged foreclosure scheme came to light after the class plaintiff lost her home to a foreclosure filed by Baum for HSBC even though the loan had never been assigned to HSBC. A “Satisfaction of Mortgage” was eventually filed by a company named MERS,  showing that HSBC never owned the loan, and the foreclosure complaint should have never been filed in the first place.

Perhaps tens of thousands of New Yorkers alone have been thrown out of their homes into the street through fraudulent foreclosure actions. As investigations have continued, it has become increasingly clear that the foreclosure violations are rampant and nationwide.

Just Who Are the Barbarians at the Gates of Rome?

Some time ago a prominent social commentator likened people opting out of their non-recourse loans to “barbarians at the gates of Rome.” And last year there was a lot of argument about the morality of individuals pursuing this right for which they had negotiated and paid. Supposedly, these people were taking unconscionable advantage of the poor lenders.

As I pointed out at the time, for people to exercise the rights which they negotiated for against well-heeled and sophisticated lenders was hardly a sign of the “break down” of law and order. It was, in fact, simply the legal process working as it should. In this case in favor of the homeowner rather than the banks, for a change. All the morality talk was designed to hoodwink the public into blaming the homeowners rather than the banks, who for years deliberately fostered lax lending practices as a way to inflate prices and increase their profits.

The Sound of Silence

Let’s just say the silence of these self-appointed guardians of morality about the revealed practices of the lenders affecting tens of thousands at least, and possibly many millions of homeowners defrauded and rendered homeless is positively deafening.

Repossession in the Real World

This article “pulls back the veil” and lets the average consumer take a look at what goes on in repossession. This should help you decide what to do if you’re struggling with car payments and wondering what repossession might do to you.

Repossession of cars and trucks, like making sausages and politics, undoubtedly has its benefits, but the actual process can be extremely unjust and disturbing to watch. This article is going to pull back the veil and let the average consumer take a look at what goes on in repossession. This article should help you decide what foreclosure could do to you if you’re struggling with car payments and wondering what actions to take.

Deal Gone Wrong

It is well-known that, when you buy a new car it depreciates substantially as soon as you drive it off the lot. In plain English, that means the car is worth much less money right after you buy it than before you own it. Depending on the size of your down payment, then, you could very well be, and most often probably are, “under water” on the loan-the car is worth less than you owe. For this reason, I prefer to buy used cars, myself, but if you don’t, and you buy well, things will eventually straighten themselves out. Provided you can continue to make the payments, the car will lose value more slowly than the note does. But what if something comes up and you can’t make the payments? That’s when you’re in for a rude surprise.

After missing a payment, you will find the auto dealership has become very interested in you. They will call and write. And they’ll keep calling and writing until your payments are current. If you can’t pay, the dealership will eventually suggest you return your car-or the idea might occur to you. If you don’t return the car, the dealership may send out “repo men” to repossess the car. You may go to your accustomed parking place only to find the car gone. They won’t leave a note, either.

But not too long later, you will probably get notice that your car is to be sold “at public auction” within a certain amount of time. They may tell you about a “right to redeem,” which at least in some states is your right to make good on the payments and get the car back. Let’s assume for the present example that you can’t do that. Let’s say (to keep the numbers simple) that the purchase price of the car was $15,000, and you made a down-payment plus other payments of $5,000. The car is two years old now, and its “blue book value” is down to $8,000. So you figure that after the company sells the car, you’ll owe about $2,000, right?

Repossession in the Real World

Wrong! A month later, you’ll find out that the car was sold for $2500. They charged you $250 for the “repossession fee” and another $250 for “reconditioning.” So they “credited” your account with $2,000 against the $10,000 you owed, and now they want another $8,000 from you. They send you a letter outlining everything they’ve done. You had a camera worth $200 in the glove compartment, and you ask about that. They tell you it’s “lost.”

That’s repossession in the real world.