There are many different types of creditors working in the US, and as with any profession, some are more forthright than others. During the last quarter of the fiscal year, you have many creditors or even scammers looking to make their quotas before the year’s out. That is why it’s important to understand the laws and your rights as a consumer about repossessions.
We will focus here on automobile repossession, but the same concept could apply to any other consumer good in which there is a “security interest” (i.e., where there is a loan and an agreement that the creditor can repossess the good which “secures” the loan in the event of nonpayment).
Wrongful repossession occurs when a creditor does not have the legal right to repossess property or goes about repossessing property in a manner that does not follow state legal requirements or guidelines.
We think it’s important to bring up wrongful repossession now because many consumers can be fooled by aggressive creditors who plan to commit or have committed wrongful repossession acts. This can leave consumers devastated and backtracking to understand their rights and how they were violated.
Sadly, this behavior and harassment continue even during the heights of the COVID-19 pandemic. Consumers must know their rights best to protect themselves against unfair and deceptive repossession tactics.
When Repossession is Done Legally
A verified/secured creditor has the legal right to repossess the property as collateral against a loan/debt under particular circumstances. They must follow federal and state laws while repossessing the property. At no point in time can consumer rights be violated during the repossession process.
When speaking about wrongful repossession, people usually refer to it when it is about a vehicle – however, it can encompass any personal property article. In Maryland, state law provides consumer protection statutes, like the Maryland Consumer Debt Collection Act, to ensure that consumers’ rights are not violated.
A proven wrongful repossession usually occurs in two different ways. If you can provide documentation showing that the creditor had no right to repossess the property at all, then they are guilty of wrongful repossession. The type of documentation to prove wrongful repossession in these situations would be payment history, your loan agreement, and proof of repossession by the creditor.
Another common wrongful repossession scenario is that the creditor failed to follow the proper procedure to repossess the property.
When creditors have the right to repossess, it doesn’t mean they can obtain the property in whichever manner they please. There are procedures that they must follow to stay within the law and observe consumers’ rights. For example, in Maryland, creditors cannot reclaim the property by breaching the peace, harassing consumers, or threatening violence in any way. And under the Fair Debt Collection Practices Act, a debt collector (such as a repossession agent) cannot repossess or threaten repossession if “there is no present right to possession” through an enforceable security interest.
Also, many states, including Maryland, have laws that require you to receive notifications from creditors stating you have the right to settle the default by paying back missed payment or the loan in full before a certain date before repossession is permitted. If a consumer has their property repossessed without proper notice, then the creditor may not be entitled to any judgment for any deficiency which remains after a repossession sale. For example, the consumer who is being sued by a bank or car finance company for $10,000 might not have to pay anything if the creditor failed to give proper notices or otherwise violated the repossession statute.
What Can Consumers Do If They Are Victims of Wrongful Repossession?
Suppose a consumer is a victim of repossession abuse. In that case, it’s best to contact a consumer rights attorney to understand how the various statutes that exist under Maryland state law may protect you from a deficiency judgment and may even allow you to seek damages from an entity that violated the law.
Common harms caused by wrongful repossession can include loss of use of the vehicle, damage to the vehicle, wrongful debt collection, damage to credit scores, and sleepless nights and stress.
If you have endured hardship and trouble from repossession abuse, don’t give up. Give us a call!