For those who fall behind on vehicle loans, repossession can be a jarring and embarrassing experience. It's almost always unanticipated when it actually happens and throws plans--involving kids, work, or medical care--dramatically into the lurch. To make matters worse, the laws associated with car repossession are relatively unknown. They are some of the most difficult consumer protection laws to understand and are commonly violated. However, there are powerful but little-known remedies for consumers when car repossession procedures are not followed. When an experienced lawyer gets hold of a wrongful repossession case, they can often obtain some of the most dramatic relief available under the consumer laws. These cases are a sub-specialty of ours, and I'll say a few words about them here.
First of all, keep all your paperwork. One of the problems--and in many ways the main problem--is that consumers usually throw away paperwork. If a car lender seizes a car without the right form of notice or auctions a car without crediting the consumer's account the proper amount, the evidence is often right on the face of the papers that the consumer received. So with that being said, here is a brief primer on the key points of car repossession law in Massachusetts after a vehicle loan default:
1. A car lender must give notice and a right to cure a loan default, and must inform the consumer about the plan to seize the car, at least 21 days before the seizure. This notice should, among other things, include the words "Rights of Defaulting Buyers under the Massachusetts Motor Vehicle Installment Act." This gives you the right to pay just the amount you're behind on the loan to stop the car from being taken. This notice does not have to be sent certified mail or in any other special way: it just has to be sent by mail and it can be included with a bill. Very importantly, you only have the right to three notices during the life of a car loan. This means that if you are always late on the loan, you may have received the notices already in prior bills. Once three notices are sent and a further default happens, a vehicle can be taken with no notice.
2. If the loan default isn't cured and the creditor seizes the vehicle, the creditor must still provide a second notice allowing the consumer 20 days to pay the loan in full before auctioning the vehicle. Assuming you can't pay the loan in full and still want the car, you have two options: call the car lender to negotiate--they will often let you have the car back if you pay the repossession fees and bring the car loan up-to-date--or file Chapter 13 bankruptcy to get the car back without paying and pay the value of the car over three to five years. Chapter 13 is really the ace in the hole in these situations, but there are timing issues: the case must be filed within the 20-day redemption period, and filing a case takes time, so there is no time to delay. If the car is worth less than you owe on it, Chapter 13 can provide drastic relief. You can read more about Chapter 13 bankruptcy here.
3. If the vehicle is repossessed, and the 20 days pass without action, the creditor may sell the car. However, the consumer's account must be credited for the full amount of the vehicle's fair market value, not the lower amount that the car lender may have obtained at auction. This is a very commonly-violated law that can result in significant money awards for consumers.
4. If there is a breach of peace in the course of the repossession, you can sue your car lender and the repossession company and receive significant money damages. What's that you say? Yes, this is very little-known, but if your car lender violated the car repossession laws, often you will be able to obtain statutory damages in the amount of finance charge plus 10% of the principal plus your attorneys' fees and costs. This amount can be significant. Let's take an example, say that over the course of a $15,000 car loan you pay $6,000 in interest and other finance charges. If your lender broke the repossession laws, you would be able to make a claim for $7,500 and receive all or some of this money. If you have had a vehicle repossessed, you should see an attorney who specializes in this area of law. Many such attorneys--like me--will not charge you to evaluate your case and can at least recommend some helpful options.
What is a breach of peace? This is really complicated and depends on the specific facts. If you had any negative interaction with the repossession agent when your car was seized, you should submit a repo review form. You might just have a case.
*Note: If your car has been repossessed in Massachusetts, we might be able to help. However, due to high call volume after I posted information here about Massachusetts car repossession, we must first receive the completed form found here: http://www.mass-legal.com/repo_quest.asp. We will review your matter confidentially and free of charge.
