The truth about repossessions…

GUEST EDITORIAL

There is a truth about repossessions that most are not aware of. First, for those of you who are young and new to the world of finance or the practice of law, or old enough to forget the pertinent facts about the repossession process (a comment for my elder colleagues LOL). I remind you. There are two ways to repossess an asset from a consumer or commercial account.

#1. The judicial process and #2. The self-help process.

The first is of course using the court system and using a court ordered replevin to recover the collateral. This process most often requires a law enforcement officer to serve the registered owner of the collateral with the court ordered documents. When served with a replevin, the consumer must turn over the collateral or risk being arrested for not adhering to a judge’s order.

The second, and in most cases, the less expensive option is the self-help repossession process where the legal lien holder hires a repossession service provider to repossess the collateral.

A self-help repossession is legal only if there is no breach of peace. “Breach of Peace ” is a broad term, subject to the court’s interpretation. Many courts have ruled, and also written is some state laws that a verbal objection to the repossession constitutes a breach of peace. Also, and a very important “also”, when law enforcement is present during a self-help repossession, many courts have ruled the “color of law” present during a self-help repossession is a breach of peace violation.

Changes in the repossession assignment process has left repossession service providers struggling to stay in business. The introduction of repossession assignment management companies (forwarders) acting as middlemen are pocketing upwards of 50% of the repossession fees. This popular business trend in the repossession industry, is breaking the backs of the repossession companies as more and more of the well trained, certified, licensed and compliant companies are closing their doors.

Replacing these professional repossession companies are un-licensed, non-certified “repo thugs” who are willing to work at cut-throat fees. These less than professional “repo-thugs” are not training office and/or field employees on consumer protection laws such as the FDCPA or UCC laws.

The asset management companies (forwarders) have no choice but to hire these repo thugs as assignments come across their desks, the assignments must go somewhere. These less than professional repo companies can’t afford to maintaining their tow-trucks and equipment while the cost of fuel and other products are at a 40 year high. Consumers will ultimately suffer the consequences.

More than a couple economist are predicting a rise in vehicle repossessions. Car & Driver magazine has reported there will be more repossessions in 2022-2023 than in 2021. On Line Title Loanser has estimated 2.2 million automobiles were repossessed in 2021. The report states 5,418 are repossessed per day. Many of the professional repossession service providers have closed their doors. Who will be repossessing the collateral?

With more than 2 million repossessions predicted for the coming year, there is no doubt consumers will suffer at the illegal acts of the non-professional repo thugs. Lawsuits will no doubt increase as consumers will have no choice but to defend themselves from violent acts. In the coming months, consumers as well as repossessors will be injured, some will die.

As I said while speaking at a nationwide conference a couple years ago, when an unlicensed or untrained plumber makes a mistake, a consumer has to deal with a leaking pipe…when a non-trained repossessor makes a mistake, someone could die. My point, if you’re a lender, make sure you are aware of who is representing you in the field. It is no secret the courts have ruled the lender is responsible for the actions of its vendors.

In the last few years, I have been retained as a repossession expert witness over 25 times. I have read thousands of documents, complaints, interrogatories and depositions. If you are an attorney, expect an increase in wrongful repossession lawsuits as most cases presented to you will be a walk in the park.