Business Law – Repossessions

Business Law – Vehicle Repossession

In regards to items purchased on credit being subject to security interest by the creditor, the debtor fails to pay on a vehicle, repossession will occur, and this activity will answer the following four questions:
First question: Once someone is in default on a loan that was used to purchase a car, a creditor can repossess the car at any hour, even without prior notice. However, usually the creditor will call and make several attempts to collect on the vehicle, but if they do not hear from the customer, they have the right to repossess the vehicle without further notice. Even if they hear from the customer and arrangements are not satisfactory, they have the right to come at any time to take the vehicle without any notice give to the customer. Furthermore, this is only when the customer is in default and it can be as soon as it is in default (FTC, 2009). Still further, when a security agreement is in default it is considered in default the moment the debtor has failed to make the payment when due (Miller & Jentz, 2007).
Second question: A creditor or the creditor’s agent can come onto the debtor’s private property in order to repossess the car. An example, is in Cleveland, Ohio repossession occurs when banks, lender or car lots sales dealers, lend and the person ends up being in default. Add to this, there have been threats of lawsuits due to liability in the way repossession agents have handled the repossession of the vehicle. They have damaged personal property using agents that are not certified. Some companies or banks use third party repossession agents. However, they are now using companies that have certification and insurance in case the vehicle or personal property gets damaged in the process. Finally, creditor agents for three hundred and twenty-five dollars have a home-study course and then tested on the legal aspects to prevent liability. There are five thousand companies hiring thirty thousand agents in the United States (Battaglia, 2005).
Third question: The creditor can keep the car or even resell it. However, the customer has the option of buying back the car once all the past payments are made including the repossession fees, late fees, and storage charges. Furthermore, it is up to the creditor whether to use the car to compensate for the debt or resell the car. In addition, some states allow the debtor to repurchase the loan or write a new one. Finally, most depends on the resale value of the car. If the creditor does not get all the costs and payments up-to-date, they can go to court and get a judgment for the difference, which is called a deficiency judgment (Vehicle, 2009).
Fourth question: If other valuable items of personal property were in the car at the time of the repossession, the creditor cannot keep the items or resell them to satisfy the debt. In addition, they have to notify you that items were left in the car and tell you the best way to regain possession of your personal items. Furthermore, they are to protect your items from loss or theft from other persons. Finally, a lawyer can help you to get compensated for lost items that were in the vehicle (Vehicle, 2009).

Reference:

Battaglia, S. T. (2005). Professional repossessors. Crain’s Cleveland Business. 26(29),

17-25. Retrieved November 24, 2009, from MasterFile Premier.

Miller, R. L. & G. A. Jentz (2007). Objective 2: Comprehend the rights, duties, and

remedies of creditors and debtors under Article 9. Fundamentals

of Business Law, Summarized Cases. 7th Edition. Retrieved from Kaplan

University Web Site on November 18, 2009.

Vehicle Repossession: Understanding the Rules of the Road. Federal Trade

Commission Protecting America’s. Retrieved November 18, 2009, from

Kaplan University Web Site.

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