The car repossession business is merciless, leaving consumers stranded without transportation. The idea that the repo man visits only deadbeats is a myth. We have heard nightmare stories of a car taken in the night after one late payment or a glitch in the way a dealer set up an electronic account. Many consumer advocates complain that desperate lenders engage in deceptive practices. We at Kemnitzer Barron & Krieg are doing something about it. Along with co-counsel, we have recently settled a number of significant class actions involving defective post-repossession notices.
Most consumers think that if they can’t meet their monthly payments, their car will be towed away and that is the end of it. Something like home foreclosure. However, that is not how it works. After the vehicle is repossessed, it will be resold at a discount auction for far less than the amount owing; and the lender then attempts to collect the deficiency from the original owner. At that point the consumer has no car, mangled credit and a mound of debt.
The best thing a consumer can do in a repossession situation is to try to reinstate the contract and get the car back. The lender must send the consumer a notice of how to do so - including where to send payment, to whom, and exactly how much. This notice is called an NOI.
Kemnitzer Barron & Krieg challenge NOIs that do not give the borrower sufficient information to reinstate or redeem their contract and recover their car or truck before it is sold at auction. California law provides that, if the post-repossession notices do not comply with the Rees Levering Automotive Sales Finance Act, the lender may not collect a deficiency after the vehicle is re-sold.
The approximate amounts of the deficiency balances defendants have agreed to erase, or otherwise not collect, are summarized in this list of cases that we have settled in the last few months.
• McCoy and Castro v Alliant Credit Union (Alameda County Superior Court Case No. RG 09-444283) $7,370,853.
• Meza and Pelkey v ACC Consumer Finance LLC (Alameda County Superior Court Case Action No. RG09458893) $15,319,729.
• Friedrichs v BMW Financial Services (U.S. District Court,N.D. Cal., San Francisco Case No. C08-04486 PJH) $35,000,000.
• Stephens v Bay Federal Credit Union (San Francisco Superior Court Case No. CGC08478197) $5,159,515.
• Ford Motor Credit Company v O’Neal (San Diego Superior Court Case No. 37-2007-00077225-CL-CL-SC) $110,810,774.
• Lobel Financial Auto Cases (Sacramento County Superior Court JCCP Case No. 4563, coordinated actions) $43,808,147.
In addition to waiver of the deficiency balances, class members entitled to refunds will get a cash return of all or most of the amount they paid. In each case, the terms and procedures involved in the distribution of refunds is included in the class notices that were mailed to each class member. For more information, including the contentions of the parties, settlement terms and identity of co-counsel, click here