Wrongful repossessions happen in Indiana. We know because we represent clients who have had their cars wrongfully repossessed. There are three primary ways wrongful repossessions occur.
I. CONSUMER NOT IN DEFAULT
The first way a wrongful repossession occurs is the car is repossessed when the borrower is not in default. Repossession is generally only allowed by the lienholder when the borrower is in default on the loan obligation incurred to purchase the car. Whether the borrower is in default depends solely on the terms of the retail installment contract. Almost always, default occurs when a payment is not made on time. However, there are other ways to be in default such as failing to keep the vehicle insured. If the borrower is not in default, the lienholder has no right to repossess the car and the repossession is illegal.
II. BREACH OF THE PEACE
Repossession is a self-help method of accomplishing what ordinarily would require a court order. It has the potential for danger to those involved and therefore the law places strict limits on how a repossession can be accomplished. One of those limits is that it must occur WITHOUT a breach of the peace. A breach of the peace occurs when the car's owner objects in person to the repossession. That means that if you see your car about to be repossessed you can tell the tow truck driver that he cannot take your car and at that point, as long as the car is not already off the ground, the driver is not legally allowed to take your car. Of course that doesn't mean he won't. The car may still be repossessed, but the repossession is illegal.
Shows like Operation Repo and Lizard Lick Towing often show the repo crews fighting with car owners and then driving off with the car. These shows are FAKE. The repossessions that occur like this are in breach of the peace, are unlawful and in real life the repo crew would be towing the cars back to the owners' driveways with their tails between their legs, among other things, once a consumer lawyer became involved.
Another way a breach of the peace can occur is when the repo crew has to go into a fenced-in area or building to get to a vehicle. A repossession crew is allowed to go onto private property to obtain a vehicle (provided they have not specifically been told not to come onto the property), but they are not allowed to enter a fenced-in area, a garage, or other type of enclosure to obtain a vehicle. If they do, it is a breach of the peace.
III. INSUFFICIENT PRE-DISPOSITION NOTICE
This last one technically is not about a wrongful repossession. The repossession may be lawful, but if the lienholder does not send out the proper notice prior to the car being disposed of, the borrower may not be liable for a deficiency judgment and may even be able to collect damages from the lienholder.
What typically happens after a repossession is the lienholder sends a letter to the borrower explaining how much it will cost to redeem (get back) the car. This letter is called a pre-disposition notice. If the car is not redeemed, the car is sold at auction or otherwise, usually for a very low price, and then the lienholder goes after the borrower for the deficiency (which is the difference between the amount owed on the loan and the amount the sale of the car brought, minus repo fees).
There are strict requirements in Indiana for the pre-disposition notice. Here is what it must contain:
- A description of the debtor and the secured party;
- A description of the collateral (the car);
- Statement of whether the intended disposition is a public or private sale (Note: Almost all dispositions are private, including sales at a dealer-only auction and sales at a car lot. A public sale is a an auction where any member of the public could attend and bid - these are rare.);
- If the sale is public, a time and place for the sale and if the sale is private, a time after which the sale is to be made;
- Statement that the borrower is entitled to an accounting of the unpaid indebtedness and any charge for the accounting;
- A description of the liability for a deficiency;
- A telephone number from which the amount required to redeem the car can be obtained; and
- A telephone number or mailing address from which additional information concerning the disposition and obligation may be obtained.
If the pre-disposition does not contain each of these requirements, it violates Indiana law and may entitle you to avoid liability for a deficiency or even obtain an award of damages against the lienholder.
If you would like to consider hiring the Indiana Consumer Law Group/The Law Office of Robert E. Duff to make a claim for wrongful repossession or deficient pre-disposition notice, please click here to contact us.