Repossession Tips

Published: 06th October 2009
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Repossession Tips

1. Basics of the procedure. One will repossess a vehicle or other collateral, but you must have have numerous things set up before you may legally do that. Foremost, you need to have a written contract. Secondly, the contract or promissory note needs to include a default clause, which specifically describes what makes up a default. Then, the note or contract needs to include an acceleration clause, which says that if the debtor is in default, that you own the right to speed up the entire balance due on the contract, making it legally due at once. Lastly, your written contract must give you the right to repossess after the default and acceleration of the balance due. Fifth, on the vehicle or RV title with the Secretary of State, it needs to list you as the First Secured Lienholder. If you have all of these items in place, then you have the right to self help repossession, in the event of a default. If any one of these is absent, you may not legally repossess a vehicle or collateral. Self help repossession is a faster and more effective way of recovering collateral than a lawsuit to recover collateral, which is called a claim and delivery action.

2. Notice of repossession and right to cure. After you repossess a vehicle, you need to give notice to the debtor of the sale after the repossession, or repo sale. You have 2 choices. You can have a public sale, or a private sale. I would not do a public sale. I would do a private sale. The reason for this is that there is too many additional notice requirements for a public sale, and too many additional ways to make errors in the notice, which can be exploited by an opposing counsel later, which will result in the repo sale being set aside, and the car being returned to the debtor. In a public sale, you must provide written notice to the debtor, at least 10 days in advance, of the exact day, date, time, and location of the public repo sale. If you fail to list the exact date and time, or if it begins late, or gets postponed, the entire sale is legally void, and you must start all over again with a new written mailed notice. This occurs quite often. There is a low turnout, and a new sale date is picked, and the bank forgets to send out another notice. I have seen the whole sale be set aside on this basis alone, and the whole deficiency lost, based on this small but valuable defect in notice.

Jeffrey Bearss is a collection attorney for Weltman, Weinberg and Reis. Jeffrey Bearss can handle all your collection attorney needs. Jeffrey Bearss will answer your questions at

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