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Repossession Laws In Massachusetts

Repossession occurs when a creditor or lender takes back a vehicle from a customer who has fallen behind on loan payments. Every state has different policies regarding repossession, providing the customer with rights against creditors or repossession companies. In Massachusetts, understanding these state-specific repossession laws can help a consumer overcome this difficult situation.

Is breach of the peace illegal in Massachusetts?

Yes. In Massachusetts, the state specifically identifies that a repossession has to be obtained without a “breach of peace” (MGL c.255B, § 20B). Thus, breach of peace is considered illegal in Massachusetts. When taking back a vehicle, repossession companies are not allowed to break this law, which can encompass a variety of actions. For example, when conducting the process of taking a consumer’s vehicle, a creditor cannot use violence or force or even threaten to use violence or force to execute his task. As these acts may cause harm or pose a risk to the borrower’s wellbeing, they are seen as breaches of peace. A repossession agent also cannot try to force compliance. They cannot coerce a consumer into giving up their vehicle by causing a scene, disturbing the public order or providing them with false information. If the repo man continues to take a vehicle after explicit, continued objections or an absence of affirmation from the borrower, his actions can be rendered as a breach of peace and therefore seen as illegal.

Is trespassing illegal in Massachusetts?

Yes. The repossession company cannot perform an illegal trespass. It is unlawful for a repossession agent to enter a consumer’s property without their knowledge or approval. The agent must be granted explicit permission in order to come onto their property, which includes driveways and garages. However, it is important to note that if a consumer’s vehicle is parked on a public street around their property, the repossession agent has the right to repossess the vehicle without their permission.

How does a repossession occur?

Most of the time, a creditor will contract a third-party repossession company to carry out the repossession. The repossession company can choose to conduct the repossession at any time they wish. They have the right to repossess the consumer’s vehicle from public streets and public or private parking lots, and in some states, the company can even take a consumer’s vehicle from an open driveway on their property. However, in other states, the company cannot take a vehicle from an open driveway on the consumer’s property or from anywhere on their property.

Is a pre-repossession notice required to be sent to a consumer

Yes. Before repossessing a consumer’s vehicle, a creditor has to send a notice to the borrower or else they cannot lawfully proceed with the repossession. However, if the borrower has already received a notice of default at least three times in the past, the creditor does not have to send another pre-repossession notice.

This notice of default is also regarded as a “right to cure” and it has to be titled “Rights of Defaulting Buyer under the Massachusetts Motor Vehicle Installment Sales Act” (MGL c.255B, § 20A). A creditor can only send the notice to the borrower after 10 days of nonpayment. In the notice, the text has to provide the borrower with a “default cure” period, which is essentially a 21-day grace period for the borrower to pay off what they owe where the creditor cannot accelerate the balance or move forward with the repossession. If the borrower successfully pays off the money that is owed, they are released from the threat of repossession and their rights under the original agreement are reestablished. However, if the borrower does not repay the indicated sum of money within 21 days, the creditor has the right to repossess the vehicle if they do so without breaching the peace. The notice of default should also include the due date for the payment and the amount that is owed.

The specific text for the body of the letter should read as follows: “’You may cure your default in (describe transaction in a manner enabling buyer to identify it) by paying to (name and address of creditor) (amount due) before (date which is at twenty-one days after notice is mailed). If you pay this amount within the time allowed, you are no longer in default and may continue on with the transaction as though no default had occurred. If you do not cure your default by the date stated above, the said creditor may sue you to obtain a judgment for the amount of the debt or, if applicable, may take possession of the collateral. If the creditor takes possession of the collateral, if any, you may get it back by paying the full amount of your debt plus any reasonable expenses incurred by the said creditor if you make the required payment within twenty days after he takes possession’” (MGL c.255B, § 20A).

What can a consumer do after the repossession has occurred?

There are still rules that a creditor has to follow after repossessing a consumer’s vehicle. Within the first hour after the repossession occurred, the creditor has to report the repossession to the police department of the town it happened in (MGL c.255B, § 20C). After the vehicle is taken, a creditor also has to send the consumer a post-repossession notice which outlines their steps moving forward with the vehicle and the consumer’s rights post-repossession.

The repossession agent cannot dispose, keep, or sell any of the consumer’s personal items that were found in the vehicle they took. They have to let them take back the personal property that may have been on or inside of the vehicle when the repossession occurred.

A creditor has to tell a consumer how much money they owe and has to wait at least 20 days before reselling or disposing of the vehicle in order to give time for them to reclaim the vehicle. In order to take back the vehicle, the consumer must pay off the full amount of money that they owe.

If the creditor chooses to resell the vehicle, they have to ask for a commercially reasonable price. After the sale of the vehicle, a consumer may still owe what is known as a “deficiency balance.” This is the amount that remains after the selling price of the vehicle is subtracted from the amount on the loan in addition to any other fees that may have accumulated during the repossession. In Massachusetts, if the amount owed after the sale price is deducted from the loan and fees is more than $2000, a creditor is entitled to seek a deficiency payment from the consumer. If the amount owed is less than $2000, a creditor cannot solicit this money from the consumer. Additionally, if the price for what the vehicle sold is greater than the price the consumer owed on the loan plus fees or expenses, then the creditor has to give the consumer the profit they made.

What happens if a consumer’s vehicle was wrongfully repossessed?

If, for the present repossession, a consumer did not receive a pre-repossession notice indicating the amount they owe and the due date for the payment (and have not received three or more notices in the past) or did not receive a post-repossession notice, this could signify that the creditor did not comply with the correct provisions of repossession. In this case, the consumer could be free from owing the deficiency. Furthermore, if the repossession was illegal (if a repossession company breached the peace, trespassed on property, etc.), the consumer could be entitled to a compensation of up to $1,000 in damages. The consumer’s legal fees and other various costs could also be covered in accordance to the Fair Debt Collection Practices Act (FDCPA), a federal law that provides consumers with protection from debt collectors.

Where can a consumer look for help or for answers to their questions

In the state that a consumer resides in, a consumer protection agency, the Office of the Attorney General, and/or a consumer protection attorney who is licensed in a consumer’s respective state can help a consumer in getting help and/or determining the answer to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can assist as well.