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In California, a consumer’s vehicle can be taken from them if they miss payments on their loan or if they violate any terms of their agreement. This process is known as repossession and the creditor has the right to repossess the consumer’s vehicle if it holds a valid security interest in it. There are repossession laws that the creditor has to follow and these laws also provide the consumer with a number of rights during this process. Understanding California’s laws can benefit consumers if they are faced with repossession.
Is a breach of the peace illegal in California?
Yes.In California, a breach of the peace will render repossession unlawful. Due to the law, repossession companies are limited in what they can and cannot do during a repossession. For example, they are not allowed to be a risk to the consumer in any way. This means that they cannot use violence, physical force, or threats when attempting to repossess a vehicle. They also should not tell consumers incorrect information about the purpose of the repossession. Additionally, the repossession company must respect an individual’s property during a repossession. They are not allowed to harm private property and without the consumer’s consent, they cannot enter into a private building or secured area such as a locked garage to conduct a repossession. However, they are able to repossess a vehicle if it is parked in a parking lot or a garage that is open to the public. The repossession company has to stop the repossession if the consumer makes any objections to their actions. If they do not, a breach of the peace may occur. In order to avoid a breach of the peace, repossession companies may carry out repossessions when the consumer is not present or when they are asleep. However, these repossessions may still breach the peace if they result in damage to the consumer’s property.
Is a pre-repossession notice required to be sent to a consumer?
No.In California, consumers are not required to be sent a pre-repossession notice. If the creditor has a security interest in the vehicle, they can lawfully conduct a repossession after the consumer is in default.
What can a consumer do after repossession has occurred?
There are still a set of rules that the creditor and the repossession company must follow which guide their actions for the post-repossession process.
Within 48 hours of the repossession, the repossession company has to send the consumer a Notice of Seizure. This letter should include the name and contact information for both the creditor and the repossession company, as well as storage fees for the vehicle.
The repossession company also has to send the consumer an Inventory of Personal Effects, which lists out all of their personal items that may have been left inside of the repossessed vehicle, how they may reclaim these items, and the cost of storage. The individual has 60 days to retrieve their items and if they do not do so within this time period, the repossession company is allowed to dispose of their property. It is important to note that consumers are not entitled to reclaim items that are considered to be attachments to the vehicle (e.g. stereo systems).
After the repossession, the creditor has the right to sell the vehicle at a public or a private sale. Before the sale occurs, they must send the consumer a pre-sale notice. The notice has to be sent at least 15 days before the sale and if the creditor wishes to collect a deficiency balance, which is money that the consumer may still owe on the debt following the sale, they must send the notice within 60 days of the repossession. The notice must provide the consumer with information about the sale but it also has to include information about their right to reinstate the loan and redeem the vehicle (which they can do anytime prior to the sale). In order to reinstate the loan, the consumer has to pay back all of their missed payments and any late fees or costs accrued by the creditor. If they do so, they will be able to receive the vehicle back and return it to their pre-default rights. A consumer is only allowed to reinstate a loan once every 12 months and twice over the length of their entire contract. They can redeem the vehicle by paying back the entire balance on the loan, in addition to possible fees and costs. If they want to reinstate or redeem, they can request a 10-day extension that provides them with more time to do so.
At the sale, the creditor has to sell the consumer’s vehicle in a commercially reasonable manner. Selling the vehicle significantly under its average market value could be an indication of unlawful conduct. After the sale, the creditor should provide the consumer with a post-sale accounting which includes the vehicle’s selling price, a breakdown of how the funds were used, and the amount of a surplus or deficiency. Before the debt can be paid with the money from the sale, any reasonable expenses that the creditor accrued must first be covered. Afterward, if the money that remains can fully cover the consumer’s debt, they are entitled to any surplus that is left over. However, if the money cannot fully cover their debt, they may have to pay for the deficiency balance.
What happens if a consumer’s vehicle was wrongfully repossessed?
A consumer’s vehicle may have been wrongfully repossessed if they were not sent a Notice of Seizure, an Inventory of Personal Effects, or a pre- or post-sale notice. If the repossession was unlawful, they would not have to pay for the deficiency balance. Additionally, it is possible that the repossession company violated the Fair Debt Collection Practices Act (FDCPA) during the repossession by breaching the peace or repossessing the wrong vehicle. The FDCPA is a federal law that protects consumers from the unlawful actions of debt collectors. If a violation of the FDCPA occurred, then pursuant to the Act, the repossession company would have to pay the consumer compensation of up to $1,000 in statutory damages. They would also have to pay for the consumer’s legal fees and any costs.
Where can a consumer look for help or for answers to their questions?
In the state that a consumer resides 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 assist a consumer in getting help and/or determining the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can also provide assistance to consumers.
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