No Breaching the Peace
I’ve been around a long time and remember some great stories from my baby lawyer days about car, boat and equipment repossessions gone awry…. I thought this was pretty cut and dry, but everything old is new again, and that includes how to handle attempted repossessions.
No one knows for sure, but we may be about to see a resurgence in consumer loan defaults. If so, we may also see an increase in efforts to repossess cars, boats and other physical assets. Lender Beware: Your repo agents may not breach the peace. Borrowers Beware: How do you stop a repossession in process or try to prevent it in the first place?
So the story goes, the bank hired a repo company to repossess a car. The repo company subcontracted with a towing company for the job. The towing company employees arrived at an Indiana home in the wee hours and started to load up a woman’s car on the tow truck. She came outside and ordered them off her property. They told her that “we can either do this the hard way or…do this the easy way.” She persisted that they leave her property and she was refusing the give them the vehicle. The tow men called the police, and the responding officer handcuffed the woman, and threatened to arrest her. After the car had been towed away, the officer removed the handcuffs and left.
So wrong on so many different levels…. I can’t help but wonder what would have gone differently with a female tow employee and a male borrower, but that is beside the point.
The point is that this lady sued the repo company and the towing company in federal court for a violation of the Fair Debt Collection Practices Act. The lower court dismissed the claim as an improper attempt to bring a state-law violation as a federal violation under the FDCPA. The Seventh Circuit reversed and reinforced some relatively well-known law.
A repossession outside of a court process may only occur if the repossession “proceeds without breach of the peace” under Article 9 of the Uniform Commercial Code. If a breach of the peace occurs, the repossessor must immediately stop and seek only court remedies. The law is very clear, but the facts can sometimes be a closer call about what happened.
These facts are clear. The court recited the story in detail, and held that the facts were sufficient to present a possible violation under the FDCPA for a fact-finder to decide. Case is going to the jury. Good luck.
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