Unit 6 Business Law
Vehicle Repossession
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Vehicle Repossession
Wendy Eller
Business Law Mt 211
Vehicle Repossession
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In studying the Federal Trade Commissions article on vehicle repossession, I learned the flowing facts.
1) Once someone is in default on a loan that was used to purchase a car, can a creditor-under the law in most states-repossess the car at any hour, even without prior notice? Answer: According to the article I’ve read, the answer is yes they may do so. 2) May a creditor or the creditor’s agent come onto the debtor’s private property in order to repossess the car?
Answer: Also read in the article, the answer is yes. However, while seizing the car, they must not commit a “breach of peace”. This means that they may not use physical force, threats, or even remove the car from a closed garage without your prior permission. 3) Can the creditor keep the car or even resell it? If the creditor resells the car, but not recover the entire cost of the debt, what can the creditor do to obtain the difference? What is a deficiency judgment? Answer: Yes, a creditor can keep or resell the car in a public or private sell. State law may require, however, that the creditor inform you of the time and place of sale in order that you’re able to attend, and bid if sold publically. If sold privately, the creditor may be responsible for telling you at least the date of sell. In either case, you can be entitled to buy back rights by paying the full amount owed on the car plus any repossession, storage, sale preparation, or attorney fees or expenses. If a creditor sales the car, but does not obtain the entire cost of your debt, they may file a claim against you to pay the difference. However, they also must have gotten a “commercially reasonable” price. This means
it doesn’t have to be a high or good price, but must not be too low below market value. A “deficiency judgment” is a claim filed by the creditor to collect the remaining balance owed on the car. They must have properly followed repossession and sale procedures in order to file this claim. Also, “deficiency” is based on what you still owed on the contract and what the creditor obtains in the resale of the car. The difference (Amount owed minus creditor’s resale price) is the amount of the deficiency judgment. 4) If other valuable items of personal property were in the car at the time of the repossession, can the creditor keep or resell them to satisfy the debt? Answer: No, a creditor may not do so. They must notify you of what items were in the car and let you know how you may retrieve them or get them back. They must do this regardless of their methods used to repossess, dispose of, or resale the car. The creditor may also be responsible to insure the items are kept safe, and aren’t removed by anyone else.
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References: FTC Article- “Vehicle Repossession, Understanding Rules of the Road” Websitehttp://www.ftc.gov/bcp/edu/pubs/consumer/autos/aut14.shtm