Having your car repossessed is a traumatic experience for anyone. Not only are you left without transportation, but your credit will be damaged, making it harder and more expensive to borrow in the future. And, as repossessed cars are usually sold for less than the amount owed, your lender may be pursuing you for a deficiency. So you are left with no car, bad credit, and still in debt.
But you do have important rights. After your car is repossessed, your lender is required by law to send you a repossession notice. The contents of this notice vary somewhat from state to state, but in most states it must at minimum contain:
- What you can do to get your car back, including how much you owe and where to send your payment, or where to get this information;
- What will happen if you don’t get your car back. If it the lender will sell the car at a private sale, it must tell you the date after which the sale will take place. If the car will be sold at a public sale, the notice must tell you the time and place of the sale. The place of the sale should be an address, not just the name of a city. You have the right to attend and observe a public sale. Attending a sale can help you protect your rights
- Whether the sale will be public or private.
- That you may be liable for a deficiency if the sale price is less than the amount owed.
- Who you can contact to get more information.
You should review your repossession notice carefully. If a repossession notice leaves out or misstates required information, the lender may be liable to you for statutory damages. In some states, the lender’s failure to comply with the law means that it cannot collect a deficiency. The law imposes these strict requirements to protect borrowers’ rights when their property is seized. Even seemingly minor omissions can mean that borrowers are deprived of critical rights.
After your car is sold your lender must send you a second notice that tells you how much it sold for and if a deficiency remains, how much the deficiency is.
At Roddy Klein & Ryan, we take these protections very seriously. We regularly challenge notices that don’t give borrowers the information the law requires. Here are just a few of the class actions we and our co-counsel have settled involving defective repossession notices in the last few years, along with the amounts obtained for the class, which includes the deficiency balances lenders have agreed to waive, and the cash obtained. In these settlements, the lenders also agreed to correct borrowers’ credit reports:
- Malacky v. Huntington National Bank, Case No. CV 03 491420 (Cuyahoga County, Ohio) ($27.4 million class action settlement in favor of state-wide class of borrowers whose cars were illegally repossessed);
Clague v. FirstMerit Bank, Case No. 03 CVF 27720 (Cuyahoga County, Ohio) ($18 million settlement on behalf of state-wide class of car owners subject to flawed repossession practices);
Claudio v. Lance Acceptance Corp., Case No. 04 CVF 137406 (Lorain County, Ohio) ($5.6 million settlement on behalf of state-wide class of car owners subject to flawed repossession practices)
Grace v. Affiliated Financial, Case No. 05-017194 (Broward County Ct., Fla.) ($3.8 million class action settlement in favor of state-wide class of borrowers whose cars were illegally repossessed).
Tidewater Finance Company v. Wade, et al., Case No: CV 05-562559 (Cuyahoga County, Ohio) ($3.2 million settlement on behalf of state-wide class of car owners subject to flawed repossession practices).