Need legal advice - Why chat?Butch?

We are surrendering our '01 F150 truck but the loan is with a bank. They are asking us to first bring the truck to CarMax for an offer, fax it to them, and they will send the title directly to CarMax when the receive the check from CarMax. Our payoff is over $15,000 and we expect CarMax not to pay more than $7,000-$8,000 since the truck has high miles and been used as a delivery/construction truck. When I spoke with the bank last week, they explained that they wanted us to take this route in order to get the most money for the vehicle instead of the bank sending it to an auction. Whatever the balance left on the loan, we would then "agree" to making payments till paid off and cleared on our credit. On the phone, I just kept saying "oh, ok.....yeah.....etc" but I honestly do not have any intention to pay the balance. The bank said if we decided that we just didn't want to deal with this, then to call them and they will pick up the truck and take it to an auction.

We currently have almost $75K in unsecured debt and $15K balance from a surrender vehicle last year - all of which is in collections. Last year we were planning on filing bankruptcy but since studying on this board for months and reading, "To Pay of Not to Pay" we have decided to fight back instead of having a BK for 10 years. We do not have a house to lose and no assets to reposses. I know it will be a struggle this way but it is what we want to do. Just to start with, 9 out of 10 of the collection agencies sending me letters are not registered and bonded in Illinois which is required by law to conduct collection activities so I have a lot of ammunition to fight with.

My question is: Does anyone know what legal ramifications we would face from the bank if we do what they want - take the truck to CarMax instead of letting them tow it and auction. They mentioned on the phone something about signing agreement to the left over balance/loan which I have to intention of doing but did not want to tell them that. I am willing to take the truck to CarMax so they can get the most money for the truck as possible instead of an auction, but I want to be in the best legal position to fight the balance of the loan. Why doesn't the bank bring the truck to Carmax themselves when it is surrendered since it would give them more money than an auction?? Will the bank even release the title to CarMax for less then the payoff if we refuse to sign agreement to pay the balance??

I would really appreciate any legal/credit advice for our situation but please keep any ethical advice/judgement to yourselves. I have heard them all before and this post is not about why we are not paying the balance but how to best protect ourselves legally. Thanks so much.

 

Butch - thanks so much for the link. I knew I could count on you to point me in a good direction. The Repossession and Foreclosure book on that site looks very comprehensive and should be able to provide me with a ton of information and advice for my situation. Additionally, I found a link there to the National Association of consumer Advocates at www.naca.net/ where I was able to search for a lawyer in my state experienced in repossession laws and willing to help lower income consumers. For others interested here's the welcome from their home page.....

Welcome to our Web site
NACA is a nationwide assosciation of more than 1000 attorneys and consumer advocates who have a wide range of experience curbing abusive and predatory business practices and promoting justice for consumers. We believe that consumers, particularly those of modest means, are inadequately protected from unscrupulous business practices in connection with the extension of credit and collection of debts. Financial institutions, from finance companies to morgage brokers to credit card issuers, take advantage of the complexity of commercial transactions and the lack of sophistication of comsumers and impose exorbitant charges on them. These corporations are motivated too often solely by the bottom line, without regard to the morality or even legality of their practices. The unfortunate result is that consumers are deprived of huge sums by these companies through fraudulent and deceptive practices in connection with the extension of credit. Within this site you can find fact sheets on comsumers issues, a useful resource list of our members, who may be able to answer particluar questions about the laws in your state.

I haven't had time yet to explore the whole site but I will definately be contacting one of the lawyers in Chicago for advice.

 

southland2 - we are dealing with Harris Bank and our main concern when I posted was exactly what you stated, "...I wonder if the bank will have a stronger claim against you if you sign their agreement than if you just surrender the vehicle?"

The Illinois Legal Aid web site states under "How to Prevent Repossession of the Family Car"...... The law requires that all aspects of the resle be "commercially reasonable" This means that the manner, method, time, place and terms of the resale must all be reasonable by commonly accepted commercial practices. The creditor must use "every reasonable means" and their "best efforts" to obtain the full value of the car of other property.

As a consumer who may be liable for a deficiency, you should be very interested in the price obtained by the creditor at the resale. Remember, the higher the price, the lower the deficiency. Just because the sale brought a lower price for the car does not prove that the sale was unreasonable. But, if there is a big difference between the price obtained at the resale and true value of the car, a court might look very closely at all aspects of the sale to see if it was fair.

When the creditor is trying to get a deficiency from you, it is important to determine if you got a proper notice of resale or if the resale was done in a commercially reasonable manner. If not, you have both a defense and a counterclaim againt the creditor. You should assert both the defense and the counterclaim. If you do, you can see that it is possible to both avoid the deficiency and to recover damages from the creditor.

Resale of the Car by the Creditor and Deficiency Actions

Fortunately for the consumer, many legal claims and defenses are available where a creditor seeks a deficiency. Because the repossession and the resale are conducted without court supervision, the creditor is required to comply with many technical requirements. If the creditor trips up on even one technical requirement, the deficiency action may be thrown out or the creditor may even end up owing money to the consumer! Because this often happens, it is a good idea for the consumer to get legal advice before paying any deficiency amount.

Return the Car to the Creditor, But Get a Deal

Another option is to voluntary surrender the car to the creditor which holds the contract. This likely will not be the origianl seller if the contract was assigned to a bank or other financial institution. Don't do this if you don't get something in return. Turning in the car can help the creditor because not only can he avoid repossession costs, but also he can sell the car for a low price and then come after you for the difference. Also, you might be waiving some of your claims and defenses such as a claim that the creditor did not have a valid security interest or that you were not really in default.

However, taking this step might be a good idea if you can get a written agreement from the lender saying that you do not owe anything further on the loan. You can also try to get the creditor to agree not to report the default to any credit reporting agency. You might be able to persuade the lender to enter such an agreement with you if you convince the lender that without the agreement the lender will be in a legal battle to justify a repossession or to defend other claims you might have relating to the car. Get any agreement in writing!

Object In Person When the Repo Man Shows Up

It is against the law for a repo man to "breach the peace" when seizing a car. Breach of peace is a technical term, but basically it means that the repossessor cannot use bodily force or threats and cannot take property over you oral objections. Your objections should not involve force and does not have to be loud. Just politely but firmly tell the repo man not to take the car. Of course, if you are not there when the repo man shows up, you won't be able to object. It is perfectly all right for the creditor to come in the middle of the night and enter you car on the street or even on a driveway. (But, they cannot lawfully break open a locked garage).

Local police and other law enforcement officers should not be involved in assisting the repo man, unless there is a lawful court order for the seizure of the car. If you think the police were wrongfully involved, you should consult a attorney.

When the Repossession Is Unlawful

Sometime creditors will repossess a car even though the creditor does not have a right to do so or no right to take the car at that time. Other times, the repo man will not follow the proper procedures in taking the care. When these things happen, the creditor does not have any right to keep the car or collect a deficiency. The consumer has a right to get the car back and also to be paid damages. Practically speaking, this usually requires the services of a lawyer.


There is a ton of information on their web site www.illinoislegalaid.org. Use the search option for "Repossessions" to locate the complete article that I took the above information from.

I haven't figured all of this out yet, but for now I know that I have choices and the vehicle is in our locked garage till I can determine the best option for us. I might end up needing the assistance of a lawyer but our goal is to only surrender the vehicle to the bank with a written agreement that the loan is settled in full - no deficiency. One thing going for us right now is if the bank looks at our credit reports they will see that they will be behind a long, long line of creditors trying to collect money from us which should be a motivation for them to settle just for the vehicle. We will most likely take the vehicle to Carmax just to get a written offer to keep in our back pocket and not tell the bank. Then IF they do actually reposses and resell for a much lower price, we have some proof of the actual value to fight them with.

Thanks for your advice and imput.