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As a California consumer attorney who has been handling repo cases for over 20 years, I see a number of common situations that are all considered to be “wrongful repossession.”  In this article, I am going to explain what those situations are, the laws that regulate this area, and what you can do about a wrongful repossession.

Repossession By An Unknown Prior Lender.   When someone takes out an auto loan, they grant the lender a “security interest,” otherwise known as a lien, on the vehicle.  The lien gives the lender the legal right to repossess the car, without having to go to court, and is placed on the car title in order to warn any future buyer of the lender’s interest. Sometimes, a borrower scams his own lender by first fraudulently removing the lien, then selling the vehicle to an unsuspecting buyer.  The buyer knows nothing of the old lien or lender, and one day, the old lender seizes the vehicle.  Under California law, a buyer who took title without knowledge of the old lien has the superior interest.  The old lender committed a wrongful repossession by taking the vehicle, and can be sued for that.

Repossession After A Tow Yard Lien Sale.  In this situation, a borrower takes out an auto loan and grants a lien to his lender.  Later the car is damaged, stolen, or abandoned, and ends up being towed.  The tow yard has a lien on the vehicle to cover its towing and storage costs, but no one ever pays those costs.  The tow yard enforces its lien, and sells the vehicle after giving notice to the old lender and registered owner. The new buyer takes title after registering at the DMV, but one day, the car is suddenly repossessed by the old lender.  This is a wrongful repossession if all the requirements of the tow yard lien sale were met.  But in most cases, those requirements are not met, typically because the tow yard’s selling price was too far below market value.  A tow yard lien sale must be “commercially reasonable,” and unfortunately, most such sales are not.  The California tow lien statute declares that a sale is “void” if it doesn’t meet the requirements.  Yes, void!

Repossession By A Car Dealership.  In this situation, a car dealer sells the vehicle on installments, tries to cancel the deal because it can’t find financing, and then repossesses the vehicle before the first payment is even due.  Typically, the car dealership has to give you written notice of cancellation of the deal, within ten days after the sale.  If it misses that deadline, the repossession is wrongful.  We call this “yo-yo” financing in the trade, because the dealer lures the customer to come in again and again like a yo-yo, to sign a new contract.  In reality, it is the dealer’s problem if they can’t find financing within the ten days, and no one is required to sign a new contract.  Many times, the dealer will tell the customer to come in for repairs or some side benefit, and then snatch the vehicle at the dealership.  Nice!  See you in court Mr. Dealership.

Breach of the Peace.  Even if your lender has the right to repossess, it loses that right if the repossession is not peaceful, and can be sued for wrongful repossession. The phrase “breach of the peace” is a term of art, and encompasses several different situations:

• Threats of violence, or actual violence, during the repossession. This includes any pushing or touching.

• Ignoring an oral objection to the repossession.

• Repossessing from a secured area, such as an underground garage, a fenced above-ground parking area with a security gate, a locked private garage, or a gated and locked driveway.

• Lifting or towing someone while they are in the vehicle.

• Calling the police who make the consumer give up the vehicle.

Denial of Reinstatement.  Generally, California residents have the right to reinstate their auto loan contracts by paying the past due payments, and repossession fees.  If the lender denies you reinstatement, you may have a case.  There is a short list of valid reasons to deny reinstatement, but you need a lawyer to analyze whether the lender’s reason really is on that list.

Defective Post-Repossession Notice.  The lender sends out a “Notice of Our Plan to Sell Property” letter after repossession, which is a very important letter. The letter describes how to get the car back, and what will happen if it is sold. Let’s say that the lender repossesses the vehicle, sends out the letter, the consumer does not reinstate, and the car is sold at auction. There is often a “deficiency balance” remaining after the auction sale proceeds are credited to the loan balance.  But, the lender can only collect on this deficiency balance if it strictly followed California’s post-repossession notice laws.  The post-repossession notice has to have nine different disclosures, and if it is missing even one disclosure, the consumer does not owe any deficiency balance.  This is not an area for DIY!  Please call us for a free consultation if you want us to analyze your post-repossession notice and see if you owe a deficiency balance.

Applicable Law. So what laws apply here?  For repossessions without a default, or breaches of the peace, the main consumer protection laws are the Uniform Commercial Code, the federal Fair Debt Collection Practices Act, and the California Fair Debt Collection Practices Act.  In the case of denial of reinstatement or defective post-repossession notices, the main laws are the Rees-Levering Automobile Sales Finance Act and the California Financing Law.  If you have a claim for wrongful repossession, these laws afford you the right to sue for actual damages, statutory damages, and attorneys fees and costs.  The Trueblood Law Firm can represent you in a wrongful repossession case on a contingent fee, without any out of pocket cost to you, because of these strong consumer protection laws.

I wish you well on your unwanted car repossession journey.  It’s a minefield out there and I hope this article helped you navigate it.

Alexander Trueblood of the Trueblood Law Firm is California’s most well-known repossession lawyer, with the longest track record of successful cases and billions in settlements. He is based in Los Angeles, California and serves the entire state. For a free consultation, please submit a contact form below, or click at the upper right to schedule a consultation online.  Or just call us at (800) 616-9325.

 

The California Fair Debt Collection Practices Act is known to lawyers as the Rosenthal Fair Debt Collection Practices Act.  This law protects California consumers from any unfair, deceptive, or harassing debt collection practice.  You can read the law starting at California Civil Code § 1788.1.

The California Fair Debt Collection Practices Act applies to both professional debt collectors, and the original creditor.  Back in the 1970’s when California first passed the law, the only protection from debt collection harassment was the federal Fair Debt Collection Practices Act, or FDCPA.  But the FDCPA applies only to professional debt collectors and entities that purchase defaulted debt, so creditors were still unregulated.  California passed the Rosenthal Act to fill the gap, and applied it to the original creditor as well as debt collection agencies and repossession agencies. 

So who is covered?  Well, just about everyone collecting debts:  banks, title lenders, credit card companies, car dealerships, auto finance companies, assignees of your contract, professional debt collection agencies, and repossession agents.  Individual lawyers are not covered, but their law firms may be covered, and the federal FDCPA covers debt collection lawyers individually.

In 1999, the California Legislature greatly expanded the coverage of the Rosenthal Act.  It incorporated by reference any violation of the federal FDCPA as also a violation of the Rosenthal Act.  Now consumers could sue creditors not just for certain enumerated practices, but for any “unfair,” “deceptive or misleading,” or “abusive” act.  The Rosenthal Act is now one of the strongest “little FDCPA” laws in the country and has had a real beneficial effect in stopping debt collection harassment.

The California Fair Debt Collection Practices Act provides that the prevailing consumer can recover their attorneys fees and costs from the creditor or debt collector.  This means that consumer attorneys can work on a contingent fee at no out-of-pocket cost to the consumer.  The law allows recovery for actual damages and statutory damages of $1,000 for “willful” conduct.

So what types of conduct are prohibited under the law?  Here is a short list:

• Wrongful repossessions, including breaches of the peace, such as violent repos, repos into secured areas, and repossession of vehicles where there was no right to repossess.

• Ignoring a claim of identity theft.

• Calling family, friends, references, or your boss. 

• Calling you at work.

• Calling you after you disputed the debt in writing.

• Enforcing an old judgment when they never sued you properly in the original proceeding.

• Reporting a duplicate debt collection account on your credit reports, when the original creditor is already on there.

The California Fair Debt Collection Practices Act has some special provisions for victims of identity theft. After the ID theft victim sends the company certain information, it must stop debt collection and complete an investigation.  The magic information the identity theft victim has to send is the following:

• A Federal Trade Commission report of identity theft, on the FTC form.

• A written statement that has to include all of the following: (1) a statement that you are a victim of identity theft, with the specific facts that support your claim and why this debt is not yours; (2) a copy of your driver’s license; (3) a second form of ID; (4) any correspondence in which you disputed the debt; (5) utility bill or other bills showing you lived at a different residence from the one the identify thief used; (6) your telephone number or a statement to contact you only in writing; (7) identification of the identity thief, if you know it; (8) statement that the you did not authorize the use of the your name or personal information for incurring the debt; (9) a statement that says “I certify the representations made herein are true, correct, and contain no material omissions of fact,” with the date and place you signed, and your signature.

After receipt of all this information, the creditor or debt collector has to stop collections and do an investigation.  Within ten business days, the business must notify any credit reporting agencies that the debt is disputed, and initiate an internal review.  Ten business days after the review is completed, the business must notify you of the results.  The business must determine “in good faith” that your dispute is incorrect, in order to continue collections after the internal review.

Unfortunately, I think the California legislature didn’t much help identity theft victims with this law. Almost no victim of identity theft is going to get all of these requirements exactly right, as they are too complex and read like the Code of Civil Procedure.  This part of the law is going to remain a dead letter, unless consumers hire lawyers to write their letters for them.

The Trueblood Law Firm is highly experienced with the California Fair Debt Collection Practices Act.  If you would like a free consultation, please fill out the contact form below, or book a consultation online at the upper right.  You can also just call us at (800) 616-9325.

The Trueblood Law Firm in Los Angeles, California is representing multiple California consumers against CFAM Financial Services, LLC. The lawsuits allege that CFAM repossessed consumers’ vehicles without any right to do so, because the consumers owned their vehicles outright with no liens on title. The typical situation is that CFAM buys an auto loan account and the old borrower somehow manages to remove any liens from title, and sells the vehicle. The clients bought their vehicles fair and square down the line, and knew nothing of any old lien. Then, out of the blue, CFAM repossesses the vehicle even though the old lien is gone from title. The lawsuits allege that this is a violation of various consumer laws.

Introduction

Bridgecrest is a “subprime” lender, meaning it charges high-interest rates to its borrowers, who are often low-income.  The resulting high monthly payments can often lead to a repossession and derogatory credit reporting.

The Trueblood Law Firm is assisting consumers in California whose vehicles were repossessed by Bridgecrest Credit Company, LLC, which is headquartered in Mesa, Arizona. Mr. Trueblood is plaintiff’s counsel in Fernandez v. Bridgecrest Credit Company, LLC (United States District Court, Central District of California, Case No. 5:19-CV-00877 MWF (SHKx)), in which the complaint alleges that Bridgecrest violated the law by transferring vehicles from California to Las Vegas after repossession while requiring that California consumers wishing to reinstate or redeem their contracts travel at their own expense to Nevada to pick up their vehicles. Bridgecrest denies the allegations of the complaint.

For a free consultation, call (800) 616-9325 or click the “Book Online” link above. This blog post is an advertisement by an attorney, and the lawyer responsible for its content is Alexander Trueblood, located at 10940 Wilshire Blvd., Ste. 1600, Los Angeles, California 90024.

[Read more…] about Bridgecrest Financial Auto Repossession Litigation

The Trueblood Law Firm, based in Los Angeles, California, has recently filed the following consumer protection cases.

Capitello v. Coastline Recovery Services, Inc.  United States District Court, Central District of California Case No. 2:16-CV-03169-CAS-SS.  This case alleges that Coastline, a repossession agency, entered a consumer’s closed and locked underground garage, without permission, which is a breach of the peace. In addition, the case alleges that Coastline failed to mail required notices after the repossession to the consumer.  If your vehicle was repossessed by Coastline and you did not receive notices in the mail after the repossession, please give us a call, for you may be an important witness.

Gomez v. Glendale Nissan.  Los Angeles Superior Court Case No. BC 615975.  This case alleges that Glendale Nissan engaged in “yo-yo” financing and an illegal repossession.  The allegation is that Glendale Nissan could not obtain financing on the contract, made harassing phone calls and illegal threats, including impersonating government officials, to try to coerce the consumer into signing a new contract, and then illegally repossessed the vehicle when the consumer was current on her loan.

Jordan v. LAW Recovery.  United States District Court, Central District of California Case No. 2:16-CV-03381-RSWL-AS.  This case alleges that LAW Recovery sent two agents to repossess the plaintiff’s vehicle, one of whom was unlicensed, who then entered a secured underground garage after being denied permission by the apartment manager, then falsely told the consumer that that if he did not hand over the vehicle immediately and assist in moving a blocking vehicle, he would not be able to reinstate his contract by paying the past due amounts, but would instead have to pay the entire loan balance to get his vehicle back. The complaint alleges that this was untrue, because in California consumers whose vehicles have been repossessed generally have a right of reinstatement.

Nguyen v. CARS Recovery.  United States District Court, Central District of California Case No. 16-CV-06811-FMO-MRW. This case alleges that CARS Recovery, a repossession agency, entered a consumer’s secured, gated apartment complex, without permission, which is a breach of the peace.

Thorpe v. Statewide Recovery Services, Inc.  United States District Court, Central District of California Case No.16-CV-06859-ODW (GJSx). This case alleges that Statewide, a repossession agency, entered a consumer’s secured, gated apartment complex, without permission, which is a breach of the peace.

For a free consultation, call (800) 616-9325 or click the “Book Online” link above. This blog post is an advertisement by an attorney, and the lawyer responsible for its content is Alexander Trueblood, located at 10940 Wilshire Blvd., Ste. 1600, Los Angeles, California 90024.

The Trueblood Law Firm was class counsel in a class action lawsuit brought against VW Credit, Inc. in the United States District Court, Central District of California, entitled Sharma v. VW Credit, Inc., Case No. CV-11-08360 DDP (Ex).  The complaint alleged that Volkswagen Credit violated California’s Rees-Levering Automobile Sales Finance Act by issuing defective post-repossession notices to consumers who had their cars repossessed.  The action settled on an individual basis, without any determination by the court as to whether VW Credit, Inc. violated the law.

Now, the Trueblood Law Firm is investigating whether VW Credit, Inc. is still violating the post-repossession notice laws.  If you entered into a contract to purchase a vehicle in California, and your vehicle was repossessed by VW Credit, you could give us valuable information about VW Credit’s current repossession practices.  We are offering a free consultation and evaluation of your post-repossession notice.  If your notice was not compliant with the law, the law provides that you do not owe any deficiency balance to VW Credit, and you might be able to have any derogatory credit reporting removed from your credit reports.

For a free consultation, call (800) 616-9325 or click the “Book Online” link above. This blog post is an advertisement by an attorney, and the lawyer responsible for its content is Alexander Trueblood, located at 10940 Wilshire Blvd., Ste. 1600, Los Angeles, California 90024.

By F. Paul Bland, Executive Director, Public Justice

Banks and payday lenders have had a good deal going for a while: They could break the law, trick their customers in illegal ways, and not have to face any consumer lawsuits. Armed by some pretty bad 5-4 Supreme Court decisions, they could hide behind Forced Arbitration clauses (fine print contracts that say consumers can’t go to court even when a bank acts illegally), even when it was clear that the arbitration clauses made it impossible for a consumer to protect their rights.

But the free ride is coming to an end. After an extensive study, that proved beyond any doubt how unfair these fine print clauses have been for consumers, the CFPB is taking a strong step to reign in these abusive practices. In a new rule, the CFPB says banks can no longer use forced arbitration clauses to ban consumers from joining together in class action lawsuits. That means banks can no longer just wipe away the most effective means consumers often have for fighting illegal behavior.

This is a common sense rule that will go a long way in combating some of the financial industry’s worst practices.

In recent years, for example, if a bank systematically cheated 10,000 consumers in the same way, the bank could use its arbitration clause to stop those customers from going to court together. Each individual had to figure out the scam, figure out what their rights were and then spend time and money fighting the bank and its expensive lawyers. Everyone was essentially on their own. Under most arbitration clauses, one or two customers (at most) would have the means and ability to fight all the way through the arbitration system to get their money back.

In contrast, a class action could offer all 10,000 people a fair shot at justice.

Exempting the financial industry from the normal legal system has had far-reaching – and terrible – consequences. Predatory lending and dishonest practices have pushed millions of people right into desperation. Far too many Americans have been tricked into taking out loans that were far more expensive than they realized.

But help is finally on the way. The free ride is ending.

When it passed the Dodd-Frank Act, Congress required the CFPB to study the use of forced arbitration clauses and take action if those clauses undermined the public interest. So the CFPB undertook a huge, data driven empirical study, which it released in March of 2015. The study found that, when consumers could go to court as part of a class action, they recovered billions of dollars in relief. Banks had to refund over charges, erase illegal or inflated debts, and correct inaccurate credit reports.

When consumers were subject to forced arbitration, though, nearly all of those wins disappeared. Almost no consumers actually fought their way through the complex and biased corporate arbitration system. They just gave up. Predatory lenders generally kept whatever money they’d taken, and could operate in a Wild West manner, unless a government agency intervened on behalf of the helpless consumer.

How did arbitration get to be so unfair? In the past, many state laws were clear that if an arbitration clause that banned class actions would undermine a consumer protection law, then a court should strike it down. But in a pair of 5-4 decisions, Justice Scalia wrote opinions that swept all that law away. As a result, corporations could write fine print contracts that would override actual laws. These decisions – one in 2011 and one in 2013 – were unmitigated disasters for consumers and they transformed the Federal Arbitration Act – in place since 1925 – into a Federal Predatory Lender Immunity Act.

But today, things are changing. The CFPB is living up to its name — the Bureau really is protecting consumers. CFPB Director Rich Cordray is probably the most effective agency head in the federal government. He is not afraid to stand up to huge and politically powerful corporations on behalf of the American people. He’s worked hard to ensure the agency lives up to the vision that Elizabeth Warren had when she was advocating for its creation. It’s no wonder why politicians who get huge campaign contributions from large banks hate the agency so much. Many House Republicans attack the CFPB almost as often as they try to repeal the Affordable Care Act.

Today’s action is probably the biggest step forward for consumers since Dodd-Frank itself. It’s a huge step forward in the fight for common-sense protections. It’s a new rule that says the financial sector doesn’t get to re-write – or break – the rules anymore.

The firm successfully defended our client against three lawsuits involving student loans, brought by National Collegiate Student Loan Trust, in the Los Angeles Superior Court (Main Case No. BC 588089).  The cases together sought over $60,000 against our client, who had guaranteed the student loans of her ex-boyfriend while in college.  When the ex-boyfriend defaulted years later, NCSLT sued our client, who had never benefited from the loans.  The statute of limitations analysis was complicated in this matter by the fact that three different states were involved, with five possible statute of limitations periods.  We determined that the correct statute was California’s four-year statute of limitations, raised the defense, and noticed NCSLT’s deposition. NCSLT and its lawyers Patenaude & Felix then abandoned the case, and dismissed.  Our client walked free of $60,000 in alleged student loan debt, demonstrating how important the statute of limitations can be.

A junk debt buyer is a collection agency which has purchased a portfolio of delinquent or charged off accounts from credit card companies, or other collection agencies. Credit card debt accounts for nearly 70% of the accounts sold to junk debt buyers, followed by auto loans, telecommunications debt and other retail accounts. Some of the better known junk debt buyers are Asset Acceptance, NCO Group, Portfolio Recovery Associates, RJM Acquisitions, Cavalry Portfolio, Unifund, Midland Funding, First Select, and Sherman Acquisitions.

Junk debt buyers purchase debts on which other debt collectors have failed. Usually, the debts are too old to be sued upon, or the debtor is judgment-proof, or the debtor cannot be located, or the debt has even been discharged in bankruptcy. Because the accounts are inherently hard to collect, junk debt buyers pay only pennies on the dollar for the debt.

[Read more…] about Some Deep Background on Junk Debt Buyers