Repossession Laws In Arizona
In Arizona, a consumer’s vehicle may be repossessed by their creditor if they stop making payments or violate any of the terms of their loan. If the creditor has a secured interest in the vehicle, they have the right to conduct a repossession once the consumer enters into default. Each state has its own laws that govern a creditor’s actions and a third-party repossession company’s actions during the process of repossession and understanding the laws in Arizona can benefit consumers if they find themselves in a repossession situation.
Is a breach of the peace illegal in Arizona?
Yes. It is illegal for repossession companies in Arizona to breach the peace during a repossession. Since a breach of the peace is considered to be a criminal offense, if one occurs during a repossession, the act will be rendered unlawful. Because of this law, there are many actions that a repossession company cannot do during a repossession. The repossession company cannot pose a risk to the consumer’s well-being — they are not allowed to use violence or force to seize the vehicle, and they cannot threaten the consumer. They cannot deceive an individual regarding the purpose of the repossession. They also cannot have the police intervene in the repossession if they do not have a court order. A breach of the peace can also occur if the repossession company damages the consumer’s property during the repossession. They also cannot forcibly enter into a locked garage or gated area on private property to seize a vehicle without the consumer’s permission. However, they do not need permission to conduct a repossession on a vehicle that is parked outside, such as on a street or in a lot. Additionally, if the consumer objects to their actions, the repossession company must stop the repossession and leave their property. If they do not stop the repossession after the consumer’s explicit objections, they can risk breaching the peace. Due to this, repossession companies often choose to carry out nighttime repossessions in order to avoid any interaction with the property owner and the possibility of a breach of the peace. However, it is still possible for nighttime repossessions to breach the peace and one way that this may occur is if the consumer’s property is damaged as a result of the repossession.
Is a pre-repossession notice required to be sent to a consumer?
No. Creditors in Arizona are not required to send a pre-repossession notice before they conduct a repossession. However, the consumer must be in default and they must have a valid security interest in the vehicle in order for the repossession to be lawful.
What can a consumer do after repossession has occurred?
Following the repossession, there are still laws that the creditor has to adhere to for the rest of the process.
If the repossessed vehicle still holds any of the consumer’s personal items, they should contact their creditor in order to retrieve these items. The creditor cannot keep an individual’s personal property but they may have the right to keep items that are attached to the vehicle like stereo systems or luggage racks.
The consumer has the right to redeem the vehicle before their creditor sells it or disposes of it. In order to do so, they must pay back the full amount that remains on the loan, as well as any late fees that they may have incurred and reasonable expenses from the repossession or storage. If the consumer can provide the payment, they will be able to receive the vehicle back but if they cannot, the vehicle will be sold.
For the sale of the vehicle, the creditor can choose between a private sale or a public auction. They have to send the consumer a pre-sale notice at a reasonable time before the date of the sale. This letter should include information about when and where the sale will occur. If the sale will be private, the creditor should include the date after the sale. The creditor has to make sure that the sale will be commercially reasonable. While they do not have to sell the vehicle for the highest possible price, they should sell it for a price that is comparable to its average market value. If the vehicle is sold for a price that is unreasonably low, the creditor could be held accountable for unlawful conduct. The consumer should be provided with a post-sale accounting after the sale has concluded. This notice should contain the vehicle’s final selling price, as well as how the sale funds were used and if there is a surplus or debt that remains. The money received from the sale needs to be used to pay for the creditor’s fees accrued during the repossession or sale before they can be used to pay for the consumer’s debt. If the sale of the vehicle is enough to fully cover their debt, they have the right to receive any possible surplus that is left over. However, if the money brought in from the sale is less than the amount that the consumer owes, they may have to pay for the deficiency balance, which is the remaining part of their debt.
What happens if a consumer’s vehicle was wrongfully repossessed?
If a creditor violated Arizona’s repossession laws, the consumer’s vehicle may have been wrongfully repossessed. This may have occurred if the creditor seized the vehicle before the consumer was in default or if they failed to provide the consumer with a pre- or post-sale notice. If the repossession was unlawful, the individual would not have to pay for the deficiency balance. Additionally, as a result of the repossession company’s actions, a violation of the Fair Debt Collection Practices Act (“FDCPA”) may have occurred and caused the repossession to be unlawful. The FDCPA is a federal law that aims to protect consumers from unlawful debt collectors. If the repossession company breached the peace or repossessed the wrong vehicle during the repossession, it is likely that they violated the FDCPA. If this is the case, then pursuant to the FDCPA, the repossession company would have to pay the consumer compensation of up to $1,000 in statutory damages and the company would have to pay for their legal fees and any costs as well.
Where can a consumer look for help or for answers to their questions?
In the state that a consumer lives in, a consumer protection agency, the Office of the Attorney General, and/or a consumer protection attorney who is licensed in a consumer’s respective state can help a consumer get assistance and/or determine the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can be of help to consumers as well.