Maine Bankruptcy and Debt Relief Blog

What Rights Do I Have If My Car Is Repossessed?

Posted on 08/05/2009 at 05:52 pm by Jim Molleur
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Bankruptcy Article #27

Losing a car to repossession is a traumatic experience for any consumer. Not only has the consumer lost access to their means of transportation, but their credit will be damaged, making it harder and more expensive to borrow in the future. And, because most creditors sell repossessed cars at auction for wholesale prices, the sale price may be far less than the balance owed on the loan, leaving the consumer facing liability for the "deficiency" or the difference between the sale price and the loan balance.

Consumer Protections for Deficiencies on Repossessed Vehicles

Maine provides consumers with important legal rights that protect them against the creditor's claim to a deficiency when their car is repossessed.  For example, after a repossession, the creditor must send the consumer a notice that specifies exactly how and when the repossessed car will be sold. For private auctions, the creditor must disclose the date after which the car will be sold, tell the consumer about any liability for a deficiency, and give a phone number to call for information about how to redeem. If the notice provides for a public auction, in addition to the information set out above, it must disclose:

• the city where the car will be sold
• the street address of the sale
• the time of sale
• the date of the sale

These statutory rights entitle the consumer to attend the sale, and make sure it is conducted properly. A notice that lacks any of this required information "is insufficient as a matter of law." Official UCC Comment 2 to section 9-614.

How Do I Know if a Deficiency is Unlawful? Ask us!

If a creditor does not provide all the information the law requires it cannot collect a deficiency. In addition, the creditor may be liable for statutory damages equal to the sum of the finance charge in the transaction, plus 10% of the amount financed.

If you have a question about whether a repossession notice complies with Maine law, contact us. We will be happy to review the notice free of charge.