What is Wrongful Repossession?
Secured creditors have the legal right to repossess property that is collateral for a loan under certain circumstances. That legal right is known as repossession. If the creditor does not have the right to repossess the property or does not complete the repossession according to the requirements of the loan agreement and state law then the repossession is deemed a wrongful repossession.
When is a Repossession Wrongful?
As stated above, a wrongful repossession occurs if one of the following two factors is proven by the debtor:
· The creditor had no right to repossess the property: this is usually easy to prove. You simply need a copy of your loan agreement, documentation of your payment history and proof that the creditor repossessed the property. Your loan agreement will provide the answer as to whether the creditor had a security interest in the property and the circumstances under which the property could be repossessed. Your payment history will indicate whether you were in default on the loan. Together, this information will determine whether the creditor had the legal right to repossess your property. If the creditor did not have the right to repossess the property but did so anyway then a wrongful repossession likely occurred.
· The creditor failed to follow proper procedures to repossess property: even if the creditor had the right to repossess the property, the creditor is required to follow all of the laws in your state about how to repossess property. For example, many states require creditors to provide you with notice that indicates that you have the right to cure the default by paying past due amounts or paying the loan in full by a date certain. Prior to that date and absent providing the required notice, the creditor cannot repossess the property. Similarly, state laws require that creditors do not breach the peace when they repossess property. If, for example, your car is parked in your locked garage then a creditor cannot break down your garage door to take possession of the car. If the creditor fails to provide the legal notice, breaches the peace, or violates any other law related to repossession then a wrongful repossession has occurred.
What Can You do if You’ve Been the Victim of a Wrongful Repossession
If you have been the victim of a wrongful repossession then you may have the right to sue for damages. Your potential damages depend on the specific circumstances of your case. A wrongful repossession may prevent a creditor from recovering a deficiency judgment against you for the difference between the money that was owed to the creditor and the value of the collateral that was repossessed. Additionally, you may be able to receive statutory damages for the act of wrongful repossession, property damages if your property was harmed during the repossession, and consequential damages if the repossession hurt your credit rating or impacted your ability to keep your job. For these reasons, it is important to understand when a wrongful repossession has occurred and take the necessary steps to protect your rights.
Additional Creditors Rights Articles
- The Fair Debt Collection Practices Act
- What are my obligations if I co-sign a loan for another person?
- Loan Default Litigation: How to Collect on a Defaulted Loan
- Lien Priorities: Who Gets Paid First?
- Repossession and Foreclosure of Personal Property
- Charging Off a Bad Debt: How, When and Why to Do It
- Loan Default: Workout, Litigate or Foreclose?
- What to Do if You Can't Pay Your Bills
- What You Can Do When Your Customers Don't Pay Their Invoices
- When Can Property be Repossessed?
- Due Diligence in Business Financing
- Are There Different Types Of Creditors?
- What Remedies Might Be Available Once A Creditor Commences A Court Proceeding?
- Will I receive Notice Before My Car is Repossessed?
- What Issues Should A Creditor Consider When Deciding Whether Or Not To Pursue A Judgment?
- What Methods are Available for a Creditor to Collect on a Judgment?
- What Is The Fair Debt Collection Practices Act?
- Can a Judgment Creditor Obtain a Lien Against the Debtor's House?
- Can A Creditor Collect Interest On An Unpaid Claim?
- Can a Debtor's Wages be Garnished to Satisfy What He/She Owes?
- How Should A Creditor Proceed If A Debtor Files Bankruptcy?
- What Types Of Debt Collection Practices Are Prohibited?
- Will Creditors Get Paid if the Debtor Files Bankruptcy?
- What Is A Secured Transaction?
- What is a Lien?
- How Can My Car Be Repossessed?
- What is Redemption?
- What is a Receivership?
- Someone who owes me money filed for bankruptcy. How do I know if I can still collect my debt?
- Where Should I Report Violations Of The Fair Credit Reporting Act?
- How can I demand payment on a debt that I am owed?
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