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Have repossession companies been sued before for breaching the peace?

On Behalf of | Oct 1, 2021 | Repossession |

Yes. There have been lawsuits filed against repossession companies for violating people’s rights by breaching the peace during repossessions. If a repossession company violated the Fair Debt Collection Practices Act (“FDCPA”), then pursuant to that federal statute, it would have to pay the consumer compensation of up to $1,000 in statutory damages, any actual damages, and cover their legal fees and any court costs.

In the United States District Court for the Eastern District of Wisconsin in the Milwaukee Division, a federal lawsuit was filed against a creditor and two repossession companies. The repossession companies were sued for alleged violations of the FDCPA and all defendants were sued for alleged violations of the Wisconsin Consumer Act. The docket number for this case is Civil Action No. 2:18-cv-01536-WED.

The plaintiffs in this case were a couple who alleged that they financed a vehicle’s purchase with a creditor and began to fall behind on their payments in 2018. The plaintiffs alleged that on the day of the repossession in September 2018, they woke up in the middle of the night to see repossession agents attempting to take their vehicle. They alleged that they saw their neighbors protesting on behalf of them, stating to the agents that they could not take the vehicle and that they must wait for the plaintiffs to come outside. The plaintiffs alleged that they agreed with their neighbors and that they were joining the protest when the repossession company repossessed their vehicle.

The plaintiffs alleged that the repossession companies violated the FDCPA because they did not have the legal right to take the vehicle since the plaintiffs protested the action. The plaintiffs also alleged that the repossession companies breached the peace since they continued with the repossession after verbal protests.

In the United States District Court for the District of Minnesota, a federal lawsuit was filed against a creditor and two repossession companies. The repossession companies were sued for alleged FDCPA violations and all defendants were sued for alleged violations of Minnesota state law. The docket number for this case is Civil Action No. 0:11-cv-02229-JNE-LIB.

In this case, the plaintiffs were a couple who entered into a credit transaction in order to purchase a camper vehicle. The plaintiffs alleged that based on the contract, they were required to make monthly payments but that they had made multiple late payments over the course of the loan which were accepted by their creditor. The plaintiffs also alleged that in 2007, they filed for Chapter 13 bankruptcy protection and that this included the financing agreement for their camper vehicle. They alleged that during their bankruptcy proceedings, they reaffirmed the camper’s agreement and continued to make monthly payments to their creditor. The plaintiffs alleged that in January 2009, their petition was dismissed and that they continued on with their monthly payments. They then alleged that in March 2011, they authorized a check to be issued for that month’s payment. Additionally, the plaintiffs alleged that in April 2011, their creditor assigned their interest in the contract to another creditor (which was also a defendant in the case). The plaintiffs alleged that they were not given notice of this transfer nor were they told to make their payments to the new creditor.

The plaintiffs alleged that they sent their payment for that month to the original creditor who forwarded it to the new creditor. They alleged that this payment was late but that the new creditor accepted it nonetheless without enforcing its security interest or the terms of the contract. The plaintiffs also alleged that they made the next month’s payment on time and were current on their obligations at the time of the repossession.

The plaintiffs alleged that in June 2011, the new creditor contracted a repossession company, which then hired a second repossession company to repossess the camper. The plaintiffs alleged that even though they made repeated late payments that were regularly accepted by the creditor, they were not issued a warning notice regarding compliance to the agreement’s terms and a “right to cure” date. In Minnesota, this letter is known as a Cobb notice and a creditor must provide this notice to a consumer if they had previously accepted late payments, in order for a repossession to legally occur.

The plaintiffs alleged that on the day of the repossession, they parked their camper at a campground and that when they were away, a repossession agent seized the camper. They alleged that the agent damaged both the camper and the goods inside of the camper during the repossession. After, the plaintiffs alleged that they were informed of the repossession after an employee of the repossession company called them to tell them that they could pick up their personal items.

The plaintiffs alleged that the repossession of their camper was in violation of the FDCPA because the repossession companies did not have a present right to repossess the vehicle. The plaintiffs alleged that they were up to date on their payments and were not in default and that they were not provided with a Cobb notice after their late payments were accepted by the creditor.

In the United States District Court for the Western District of Wisconsin, a federal lawsuit was filed against a repossession company for alleged violations of the FDCPA and the Wisconsin Consumer Act, as well as against a creditor for alleged violations of the Wisconsin Consumer Act. The docket number for this case is Civil Action No. 3:18-cv-00717-WMC.

The plaintiff in this case alleged that he financed the purchase of a vehicle with the creditor for personal use. He alleged that he fell behind on his payments in 2018 and that his creditor then hired a repossession company to repossess his vehicle. The plaintiff alleged that in August 2018, he was sitting in his vehicle – which was parked in a relative’s driveway – when an employee from the repossession company blocked him in the driveway. He alleged that the repossession agent demanded to repossess his vehicle. The plaintiff alleged that he told the repossession agent to stop the repossession but that despite his verbal protest, the repossession agent continued with the repossession process. The plaintiff then alleged that the employee of the repossession company threatened to call the police, in order to coerce the plaintiff into giving up his car. He alleged that after the police arrived and spoke to the repossession agent, he was allowed to leave with his vehicle.

The plaintiff alleged that the actions of the repossession company violated the FDCPA because the agent breached the peace by continuing the repossession even after the plaintiff made a verbal protest. Additionally, the plaintiff alleged that the repossession agent’s use of the police to assist in the repossession was also unlawful.

 

What constitutes a violation of a consumer’s rights during the repossession process?

A creditor has to comply with the laws of the state that a consumer resides in during the repossession process. Any third-party repossession companies that are hired by the lender of a consumer’s auto loan must follow not only the consumer’s state’s respective state-specific repossession laws but also the Fair Debt Collection Practices Act, a federal law that protects consumers from unlawful debt collectors. Prior to a repossession, and depending on the state, a creditor may have to provide the consumer with a pre-repossession notice before it can legally repossess the vehicle. When conducting a repossession, the repossession company does not have the right to breach the peace. Examples of a breach of the peace include using physical force, being violent, damaging a consumer’s property, and continuing with a repossession after the consumer verbally objects to it; the act is illegal in all U.S. states.

In some states, it is illegal for a repossession company to trespass onto a consumer’s property without the consumer’s permission to conduct a repossession on their property. It is also illegal for a repossession company to repossess the incorrect vehicle. Depending on the state, a creditor may have to send the consumer a repossession notice, such as a pre-sale notice for the disposition of the vehicle, and/or a post-sale notice after the repossession has occurred. If a consumer’s vehicle was unlawfully repossessed, it is possible that the consumer would not have to pay any deficiency balance on their loan. If the repossession company violated the FDCPA, then pursuant to that federal statute, the repossession company would have to pay the consumer compensation of up to $1,000 in statutory damages, any actual damages, and cover their legal fees and any court costs.