Consumers who fail to make timely car payments or maintain insurance on their financed vehicles may face repossession. Under most auto loan contracts, the finance company has a security interest that allows them the right to take their car back without a court order or a repossession notice, and then auction the vehicle to pay off the underlying car loan. Recent statistics show that 1.7 million borrowers faced this situation in 2018, with numbers expected to top 2 million within the next decade. Here are five things that make a wrongful repossession.
How Companies and Agents May Illegally Repossess Vehicles
1. Breach of Peace
While lenders can take a car back if the consumer fails to make loan payments, they must still obey the law and not cause a breach of the peace. Broadly, this means that financial institutions and their agents can take your car back if you have missed a payment. But, they may not engage in conduct that is likely to cause a disturbance or violence, called a “breach of peace.” The following are the most common ways that we see finance companies and repossession agents breach the peace during a vehicle repossession. These tactics will also convert what is otherwise a perfectly legal repossession process into an illegal one, opening the door to a remedy for the consumer.
If you would like a free consultation with a repossession lawyer, call our toll free number today, (888) 400-CREDit | (888) 400-2733.
2. Consumer Objections
Even though creditors and their repossession agents have the right to retake a vehicle if the consumer is past due on their auto loan, they may not start a car repossession the vehicle if the consumer objects. There are no magic words required here. Any words that indicate the consumer's objection are sufficient. And if the consumer does object, the repo man must stop and try again at a different time. If the agent refuses to honor this objection and continues, consumer laws may make them responsible for paying compensation.
Most finance agreements provide that the finance company can come onto your property to take the vehicle if you default on your auto loan. Even if your contact has a provision like this, consumer protection laws do not allow finance companies or their agency to break into locked yards or garages. Likewise, the right to take a car back if a consumer has defaulted on loan terms does not give financial institutions the right to destroy unrelated property like fences, locks, or doors. By breaking into a closed garage or yard the repo agent may be committing the crime of criminal trespass or breaking and entering, both of which can be serious. So if a repossession agent wants to access a locked area, they must secure the consumer's permission or else risk violating the law and committing a breach of peace. The creditor cannot wipe out your consumer rights, even if the contract allows it.
4. Repossessing An Occupied Vehicle
Traffic laws prohibit passengers on towed vehicles, so you would think that no company would repossess an occupied vehicle. Even so, a repo man who continues to be frustrated in their efforts have resorted to this practice, hooking up occupied vehicles to their tow truck. In most instances, this practice violates more than the motor vehicle code. Intentionally causing contact with an occupied vehicle can be battery and moving an occupied vehicle may constitute a kidnapping. Both of these are serious crimes and constitute a breach of peace that can turn a lawful repossession into an illegal one.
5. Threats of Force
Most repossession companies will attempt an auto repossession when no one is present — while the consumer is asleep, at work, or shopping. In some instances though, the repossession agent does not want to wait for the consumer to leave the vehicle unattended or cannot access the vehicle without the consumer's help. In these cases, repossession agents might ask the consumer to provide access to the vehicle or for keys so that they can drive the vehicle rather than call a tow truck. If the consumer refuses, tempers can flare and trouble can result.
In those cases, it is not uncommon to see the participants begin to threaten the use of force, with consumers attempting to defend their car and repossession agents attempting to enforce the right to take the vehicle. No matter who starts the threats , if violence becomes a possibility, then the repossession agent must stand down and leave the scene. Continuing in a repossession that has turned violent is a breach of peace that turns a legal repossession into an illegal one.
6. Police Involvement
Most repossession agencies will not attempt to take a car without first notifying the police. The repo companies do this to ensure that law enforcement do not mistake their agents for car thieves and accidentally shoot or arrest them. While notifying the police is good practice that helps prevent unfortunate mistakes, police involvement can go beyond what the law allows.
Police are charged with keeping the peace and ensuring the safety of everyone in their jurisdiction. Often in repossessions, the police believe that this duty goes beyond safety and keeping the peace. Instead, police sometimes believe it is their job to assist the repo man in taking the vehicle by instructing consumers to turn over vehicles, or opening locked garages.
Sadly, most police departments have yet to learn that this is not their job, and they have no legal authority to help in this way. These actions by police operate as “curbside courtrooms” and are illegal. More importantly, not only are police prohibited from helping in repossessions, repo agents in Michigan are not allowed to ask for this help. By using police to help, repo agents open themselves to claims of civil rights violations as well as violations of collection law.
If you need legal advice about police involvement in your repossession, we offer free consultations. Call (888) 400-CREDit | (888) 400-2733.
7. Spot Delivery or Yo-Yo Sale
If you have received a call from the dealeship after the purchasing a new or used car, telling you that your financing has fallen through and you need to sign a new loan agreement, you may be a victim of a "spot delivery" scam. Dealers regularly mishandle the financing process for consumers, leaving them without a financing company.
In many cases, after the consumer has brought the car home the car dealer will tell the consumer that they must pay a higher interest rate, a bigger down payment or a more expensive monthly payment. These demands may come with a threat that unless the consumer agrees to the new contract, they will lose their car, their down payment and any trade-in they have given. If the consumer resists, their car may be repossessed on the next day. This is known as a “spot delivery scam” or “yo-yo sale,” and it is illegal in Michigan. In some extreme cases, the dealer will reclaim the vehicle using repossession, threat of arrest or tricking the consumer into returning the vehicle to the dealer. When the dealer is ready, they yank the consumer back to the dealership like a "yo-yo" at the end of a string.
If you have been asked to return to the dealership to sign more papers or a new contract, you may be a victim of a Spot Delivery or Yo-Yo sale. Call for a free consultation, (888) 400-CREDit | (888) 400-2733.
Remedies for Wrongful Repossession
If a repo agent has wrongfully repossessed your car, consumer protection laws provide for three remedies. First, in some cases, consumers can ask a court for the return of the repossessed vehicle before it can be sold at an auction or private sale. Most often this will apply if your car was taken even though you made no late payments, were not in default, or if you paid your loan balance before the repossession. But you may have the legal right to the return of your car in some other situation. Second, if the creditor or repossession company has violated the law, your balance may be wiped out, and you may not be held responsible for the deficiency. This would also mean that the credit could not send the deficiency balance to a credit reporting agency or a debt collection company. Third, if the repossession was illegal, you may be entitled to compensation for the loss of the vehicle in addition to any other consumer protection remedies. Fourth, you are always allowed to demand the return of your private property including personal items left in the vehicle. Call our offices now if you think your car was wrongfully repossessed, toll free (888) 400-CREDit | (888) 400-2733.
“My Car Was Repossessed!”
If your car was repossessed using one of these tactics, your rights may have been violated. If you would like help with an auto repossession or defending a deficiency balance in court, call us for a free consultation, call our law firm today at (888) 400-CREDit | (888) 400-2733. We can help. The consultation is free and there is no fee unless we are able to recover for you. We only handle cases on contingency: There is no fee unless you recover, and your attorneys fees will be paid by the other side.
- Demand for Return of Vehicle
- Demand for Return of Personal Property
- Demand for Account Statement
Related Pages on Our Site:
Legal Decisions and Statutes
- Hensley v. Gassman, 693 F.3d 681 (6th Cir. 2012)
- Soldal v. Cook County, Illinois, 506 U.S. 56 (1992)
- M.C.L. § 445.915(j) and (k)
- M.C.L. § 440.9609