Arrest and resulting repossession?

[vnurse]

I know someone who was arrested several months ago (parole violation) and his girlfriend called the credit union who financed his vehicle and told them he wouldn't be able to make the payments. Said credit union proceeded to pick up his truck and the trailer he had been living in within a week of his incarceration. By the way, he is STILL incarcerated but had/has the means to make his payments.

Since they repossessed it, of course he DIDN'T make any payments but was it legal to repo it in the first place?! I mean, he was current on payments and everything so they had no reason to take it except for what the girlfriend told them.

I know...crazy drama! I'm not happy about even KNOWING all this but I have no idea of what type of attorney to refer him to...by the way, he will be out in about two weeks and can take care of all this himself.

Thanks, in advance, for any help at all!
--v

[guest041110]

vnurse,

I would suggest you get your acquaintance to speak with a civil attorney that specializes in contract law with an emphasis on financial matters. I will point out that there has to be more to the story than what you know since it would be most unusual for any financial institution to repossess something that was current regardless of whether the principal was incarcerated or not. However, if the financial institution did repossess something that was current on its payment schedule whereby it acted on the information from a non-signatory party of the original agreement then they most likely are in breach of contract as well as being in violation of other state and federal laws. Keep in mind that this is a civil matter, not a criminal one, unless your acquaintance can get the DA to file charges against the financial institution.

Either way, it is going to be expensive for your acquaintance. I strongly suspect you have not been given the whole story but that is me.

Best of luck with this.

[vnurse]

LonesomeDove...if you only knew! LOL! Sounds like you DO!

This person is NOTORIOUS for not telling all the details much less the truth! LOL! He is a sociopath as far as I know.

It all sounds very weird to me BUT we are dealing with very small, good ol' boys from a very small town in East Texas and I have witnessed some pretty strange (legally questionable) things firsthand so who knows?

THAT is why I am asking as to what type attorney. He can deal with this himself when he returns home. I'm just trying to answer a question for him and can GUARANTEE this is the extent of my involvement except for maybe lending an occasional ear...and I DO mean occasional! LOL!

If and that's a big IF, it is true, then he probably would be able to get another vehicle financed at the very least but we'll see...

Thanks for the info! A civil attorney...got it!

You're a doll!
--v

[GneissGuy]

Dollars to donuts that he won't find an attorney to take his case on contingency. Or that he'll recover any money after attorney's fee.

I wouldn't be surprised if it was legal to take possession of the vehicle and then sell it once he missed a payment. Especially depending on what he told them.

[JohnnyFarangly]

There are often some weasel words in contracts saying the finance company may repossess if they have reason to suspect the loan may go into default.

[charlestudor2005]

Most contracts between the CU and the debtor will have a clause that says that if the CU has reason to believe that the debtor cannot make payments as required under the contract, that constitutes sufficient cause for them to take any measures they deem appropriate to secure the security given for the loan (i.e. the personal property). Under the circumstances, the CU acted correctly and according to the law. The only way to get his property back is to pay off the loan. State law provides the procedure that the CU must follow in order repossess and resell the property to pay off the debt. One of the things the CU must do is give the debtor an opportunity to redeem the property. That means paying off the note. The he can get the property back.

This kind of law in the US is very old and pretty standard from state to state. The creditor's (CU) remedies are pretty uniform. But the CU has to follow the procedure involved very carefully, or the CU will lose its rights under the law. Most CUs know this and have repo procedure down to a science. The procedure involves giving the debtor notice of every step in the procedure from repo to sale of the repo'd property. However, they only have to give the notice to the last known address. If he hasn't changed his address to his place of incarceration, he'll never get notice, but the CU only has to send it to his last know address that they have in their records.

BTW, he doesn't have to miss a payment. All the CU needs is to be in fear of him missing a payment. Feel free to PM me for details.

[ShysterJon]

The legal concept we're talking about is called "anticipatory repudiation," which in its pure form occurs when Party A to a contract tells Party B that Party A does not intend to perform under the contract in the future, and Party B sues Party A for breach of contract. I know a little about the Uniform Commercial Code provisions that charlestudor2005 refers to in brief, and I don't believe the UCC allows repossession only in anticipation of a future breach, as opposed to an actual breach. But I don't necessarily accept that because the truck was repossessed the owner no longer had a legal obligation to make payments. Breach of the contract by the credit union may not have excused the owner's breach.

From a practical standpoint, it seems unlikely that a person just released from prison, who's been in prison at least twice, and who lived in a trailer hitched to his truck would have the money to pay a good lawyer a suitable retainer. No lawyer with any sense would take this case on a contingency.

My advice is to suggest to the owner that he sue the credit union in small claims court, as long as the amount in controversy (i.e., the value of the truck and trailer) doesn't exceed $10,000. He wouldn't need a lawyer to sue in small claims court. Whether he wins should largely depend on the rightness of his cause and, more important, the effort he puts into it.

My old law school professior, Richard Alderman, has a good reading about small claims court here:

"How to Sue in Small Claims Court"

Best of luck.

[guest041110]

What CT and ShysterJon wrote is what I was alluding to but was too lazy to research in order to put into a post. However, I believe all of those that have posted missed my point in my post above and this is the fly in the ointment vnurse. Regardless of what state statute or UCC code that is backed up by case law and shown within the CFR, i.e. as pertains to the UCC. I do believe that if the party that informed the credit union was not any part of the original contract, nor any amendment to said contract, then any information gained by the credit union for any anticipated breach of contract by your acquaintance does, in fact, create a legal liability for the credit union should it try to intercede on that information where its actions include a repossession without an actual breach of the contract in question. Therein lays the rub because if the credit union acted upon information that came from outside the signatories of the original agreement, there is a great deal of legal liability despite what CT wrote. Now after I reread what you posted, it appears that the repo, for both the truck and the trailer, occurred prior to any failure to make a payment and the repo for both items occured at the same time. An old saying is possession is 9/10 of the law but given what little I know, I would say that there is more to the situation than what you have been told sociopath or not. For any financial instution regardless of being a backwoods East Texas good ole boy deal or not to act like that would just be foolish.

While I was not explicit, I do agree with ShysterJon inasmuch as I seriously doubt any attorney worth his salt will take a case from your acquaintance given his obvious financial need. It does suck to be poor at times like this. Anyway, if you recommend an attorney, make sure it is one who not only has contract law(UCC/CFR and Vernon) but also banking industry knowledge under their belt. While these statues are pretty much common and do go back to a very old way of doing things, it is always best to have someone in your corner who knows what the heck they are doing and can support it. Also, understand that if your acquaintance files in a JP court, JP court is not a court of record. That means any decision that is appealed from the JP court will then have to be refiled in a county court which essentially means you are starting over. Once in a county court all matters will be retried from the beginning, not starting with what the JP decided.

One thing I will note in regards to ShysterJon's post is that I believe small claims court has a maximum per case value of $4,999.99 dollars or less, meaning it is my understanding that the case value, not the items that constitute a case, cannot total more than $4,999.99 dollars. From what I read in your post ShysterJon, it appears you are indicating that small claims is for anything that has a monetary value of $4,999.99 or less per item rather than by a case number and in this case there are two items. Is that how you came to a less than $10,000.00 value? Also, I am pretty certain as well that the UCC and Vernon state statutes do not allow for repossession in an anticipatory manner rather only after a failure to honor the contract wherein a breach occurs by a failure to make recompense is required prior to an act of repossession. However, there are differences between the UCC and Vernon statutes which include the fact that UCC is Federal while Vernon is State. Federal rules will supersede state rules if something happens across state lines but if an action occurs within the state boundaries then state rules have precedence.

[OneHotMale]

LD Texas is now a $10,000 case value in Small Claims Court as SJ alluded to.

[guest041110]

So I stand corrected on the case dollar amount. Interesting... Texas State Bar - Small Claims Court.

Thank you OHM.

[Sarcastro]

Under Texas law attorney's fees may be awarded to the prevailing party for a suit on a breach of contract, among other things. See Texas Civil Practice and Remedies Code § 38.001. It's not inconceivable that a hungry young lawyer might take a meritorious case in anticipation of awarded fees.

Anticipatory breach can be implicit. If a party has reason to believe that the other party may not be able to perform the contract he may request that reasonable assurances be made ("We hear you're in jail. Can you make the note?"). Failure to make reasonable assurances ("Yes, I'm in jail but I'll pay the note.") can be an anticipatory repudiation and would require the creditor to repo the truck. It doesn't matter that the creditor's concern and demand for assurance may have arisen from a non-party to the contract.

[Guest121212]

Sarcastro is correct - The fact that the party that informed the credit union was not a party to the contract has no relevance. Had anyone tipped the credit union (say the police or the prosecuting attorney) and they (the credit union) subsequently made inquiry to the Department of Corrections and ascertained that he was in fact incarcerated, the credit union would have the right under anticipatory breach to repossess if they had reason to believe the note would default. Further, based on the nature of conviction, the repossession may have been made based on the presumption of fraud in the application for the note . . . not much different than your insurance company dropping you becasue you were convicted of insurance fraud . . .

The credit union can intercede on information from any source, the newspaper, a news report, an Internet search - anything - so long as they have done their due diligence to confirm the information upon which they base their action (in this case, repossession).

http://en.wikipedia.org/wiki/Anticipatory_repudiation

Kisses,

- Jackie

[GneissGuy]

Wouldn't his damages probably be limited to the fair market value of the car minus the remaining loan value?

Of course, it's all irrelevant unless he actually takes legal action against the people involved. And there are probably some time limits involved, too.

[charlestudor2005]

Originally Posted by Sarcastro

Under Texas law attorney's fees may be awarded to the prevailing party for a suit on a breach of contract, among other things. See Texas Civil Practice and Remedies Code § 38.001. It's not inconceivable that a hungry young lawyer might take a meritorious case in anticipation of awarded fees.

Anticipatory breach can be implicit. If a party has reason to believe that the other party may not be able to perform the contract he may request that reasonable assurances be made ("We hear you're in jail. Can you make the note?"). Failure to make reasonable assurances ("Yes, I'm in jail but I'll pay the note.") can be an anticipatory repudiation and would require the creditor to repo the truck. It doesn't matter that the creditor's concern and demand for assurance may have arisen from a non-party to the contract.

This is the correct recitation of the law, and one that I had tried to convey in my first post in this thread.

All the CU has to do is to call the jail and determine the inmate is there. A further inquiry could also determine the sentence. All this from public records, and they might be able to determine this over the internet. Their only duty in this respect would be to determine that the John Jones who was incarcerated was the same John Jones on the note.

Once the CU has the vehicles, they can sell them to pay off the note. There are notices to be sent to the debtor. Then, the sale (whether it is a public sale or private sale puts different responsibilities on the CU as to notice).

If the sale brings more money than is owed (balance of note, plus costs of repo and sale), the balance is due the debtor. If it brings less, the CU may sue for the balance. Suing for the balance is normally a slam dunk. However, most financial institutions weigh the cost of the suit against the potential recovery.

[vnurse]

WOW! So many details that I would never even have THOUGHT of! I thank each of you SO very much for all of your input, REALLY!

I will pass all this information along and let him figure it out for himself. It's a messed up deal but fortunately, it is not MY messed up deal! LOL! That may sound harsh but I try to lead as much of a stress free life as I possibly can. THAT is why I don't know much about certain laws and/or actions...I haven't NEEDED to know!

Again, thank you so very much. As has been stated before, I don't KNOW all the details for a fact nor do I even WANT to. It is his responsibility and he can do what he needs to a little down the road. You all are great!