Everyone knows that if you buy a car on credit and fail to make the payments, the lender can repossess it. It’s embarrassing and will wreak havoc on your credit when the repo shows up as a landmark on your credit report. The thing many people miss is that there are right ways and wrong ways for the lenders to repossess the collateral on a loan. And, as you might imagine, the wrong ways can be dramatic–and illegal.
One client of mine missed a payment on his car. He had missed a few in the past and had always caught up, so he didn't think anything of it. Not that this meant the lender wasn’t allowed to repossess the vehicle, but my client wasn’t too worried about it. Still, he lived in an ugly part of town and always pulled both of his cars into his fenced yard and locked the gate behind them. He then went someplace with his friends–in their car.
Later that evening he returned to find his gate open, the chain had been cut, and both of his cars were gone. He called the police who told him that they could not account for one of the cars but the other car had been towed to the impound lot when it had been found in the middle of the street earlier that evening.
We managed to reconstruct the festivities that took place at the house while my client was gone. A repo company–hired by the lender–had come to my client’s house to fetch the one car subject to the defaulted loan. But it was behind my client’s other car which he owned free and clear. And both cars were beyond the locked fence. The repo agent chopped the chain with bolt cutters. He then hooked up my client’s free-and-clear car and dragged it out into the street to make it easier to access the car in the rear. He unhooked that car, leaving it awkwardly across a lane and a half in the roadway, and then went in and hooked up the car he wanted to repo. Once that was on the hook, he floored it out of there, presumably in the manner of a cartoon character with squealing tires and a lot of smoke.
My client guessed that the one car had been repossessed but he had to go and recover his other car. When he saw it he was shocked. One whole side of it was scraped–he later found the paint on the iron fencepost which it had been dragged down–and it had also gained a few more dents which no one could account for. The impound lot said it was exactly as they found it in the middle of the road. And to get the car back he had to pay an exorbitant towing bill and a mushrooming storage fee.
When my client called the lender they confirmed that they had indeedn authorized the repossession of the one vehicle. But they were not aware of any damage to his other vehicle. They suggested he the towing company to see if they knew anything about it. I won’t insult you by bothering to tell you their response.
Some people might look at this story and think “That deadbeat deserves what he got since he didn’t pay his bills.” But attorneys will point out that there are right ways to do things and wrong ways to do things. And the litigation that followed was comically swift. We sued the lender and the towing company–who immediately blamed each other. And after some bickering back and forth, they caved and made my client whole for the damage they caused to his other car.
Was my client in default on his loan? Yes. Did he deserve to have his car repossessed? Legally, Yes. Did he deserve to have his other car abused and then hauled off and held hostage–I mean, impounded by the city? Of course not. And that’s the moral of this story. Attorneys often get phone calls from people who sheepishly wonder if–because they did one thing wrong–they have lost their rights. And it often involves people who are struggling financially. People who had the wrong car “repossessed.” Or, a car repossessed which had someone inside it. Or, repossessed and lost. And so on.
If you fall behind on your payments, understand that your car might be repossessed. But if the people who take your car go further than they ought to and harm you in some other way, don’t be shy about asking an attorney or two if you have recourse. Just because you missed a payment doesn’t mean you have lost all your rights.
Steve Lehto is a writer and from Michigan. He specializes in Lemon Law and frequently writes about cars and the law. His most recent books include , and . He also has a where he talks about these things.