Totaled Auto/Cease and Desist?

Discussion in 'Credit Talk' started by danrs, Jul 16, 2001.

  1. danrs

    danrs Well-Known Member

    I have a friend at work who is really in a bad situation. To make a long story short;

    she has an auto loan, 13k outstanding

    father was driving car/making payments/paying insurance

    father totaled car several weeks after letting insurance lapse/insurance obviously denies any claim

    father has fallen behind on payments, and bank is hounding her endlessly at home and work

    1. If she does cease and desist, will that trigger immediate action by the bank, to pursue judgement?

    2. Can she do cease and desist being loan is now just late, not charged off?

    3. Is there any way she can possibly bargain with the bank/reduce amount owed in return for not having them do a repo on a car worth nothing?

    What are her options?

  2. PuuOoPaul

    PuuOoPaul Well-Known Member


    That is quite an unfortunate situation. To answer your questions, yes your friend can request the creditor to cease and desist at any time. It is best done in writing certified mail. However, a creditor is apt to act just as quickly with a lawsuit. They will be more than happy to obtain a judgment and garnish her wages with out a peep from her.

    There is a slight chance that the bank will settle the account and if shes lucky perhaps the lower of the blue book value. But honestly, I don't know. I would assume that they would take into consideration how current she was at the time of the accident. They may suspect foul play if she were late and/or pending repo review.

    She's going to have to have dad figure out a solution or pay on her own.

    Best of luck,
  3. breeze

    breeze Well-Known Member

    Wow! What an awful situation! Honestly, she is responsible for the balance of the loan. It is unfortunate, but she will now be dealing with this for a long time. I don't think they're going to be very nice about it, because loans of that type are considered "straw loans" - the person with good credit is getting the loan for a person with bad credit.

    They try to eliminate these kinds of loans with their underwriting, and when they miss one, and something like this happens, they just aren't nice about it.

    What is wrong with the father in this situation?? Who would do this to their own kid?? He could have at least told her he was in trouble, and given her the option of making the insurance payments to protect herself!

  4. cable666

    cable666 Well-Known Member

    She should continue to make payments and not tell the bank anything right now. If she defaults (has she already?), then they will probably sue for that one.

    Keep in mind that C&D's and the FDCPA only apply to CA's. not original creditors like the car loan holder.

    She will need to sue her father to recover the cost of the car unless he is a man enough to pay for his mistake.

    Also, if the father let the insurance expire or cancel, then the loan issuer is often notifed. Then the loan issuer often kicks in their own insurance coverage which they bill the borrower for the premiums.

    Check to see if this lender's insurance had kicked in before the accident. If so, you need to file a claim through them.

    I think that she is screwed. The best she can hope for is to continue to make payments on the note and hope that her father takes some responsibility.
  5. PuuOoPaul

    PuuOoPaul Well-Known Member


    This is the first I've ever heard that c&d doesn't apply to the original creditor. I have done in house collections and never would think twice to contact a debtor with a c&d on file. I would suggest to anyone being contacted after submitting a cease & desist in writing to contact an attorney or legal aid.

    Furthermore, the FDCPA governs all collections. Although there may be individual statutes that only relate to third party collectors, no creditor has a monopoly on harassment.

  6. breeze

    breeze Well-Known Member

    A C&D in this case might get her something bad. Like a court appearance, or a credit fraud charge. I would be very careful.

    She is going to have a hard time getting out of it.

    Someone mentioned the physical damage insurance the lender can invoke. Was that by any chance in force? She might have some options if it was. She would have gotten a letter telling her the insurance had lapsed, and they were putting their own insurance on the car. She will never see that money, but it might limit the amount she will owe.

  7. cable666

    cable666 Well-Known Member

    No. The FDCPA only applies to collection agencies. It does not apply to original creditors. You can not use the protections provided by the FDCPA, including honoring a C&D, against an original creditor.

    Now, there are OTHER laws, especially state laws, that regulate how a business may conduct themselves, including their inhouse collections departments. The FDCPA is not one of them.

    I mentioned that fact that the FDCPA probably won't apply here because the orignial post mentioned using that as a shield. It probably won't work unless the bank turns the account over to a CA.

    In fact, the limited scope of the FDCPA has given rise to a new "trick" that some CA's are using that the FTC reported in their annual report to Congress about the state of the FDCPA.

    Some businesess, medical and dental clinics in particular, have implemented a policy that sells all of their outstanding accounts receivable to a 3rd company. They do this before 30 days. This trick allows the 3rd party to claim that they are now the creditor and therefore exempt from the FDCPA.

    The FTC has taken a very dim view of this practice and want the FDCPA ammended by Congress to clarify what a CA is. In the FTC's opinion, if the company's primary business is collecting money, then they are a CA. The "business" claims that they are a loan issuer that buys debts from clincs before they are late.

    You can read all about this here

    Pay close attention to the paragraph titled
    "Complaints about creditors' in-house collectors". In that, the FTC discusses how the FDCPA does not apply here, yet abuses abound.

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