Repossession Laws In Pennsylvania
Repossession can occur if a consumer is in a loan agreement with the creditor but fails to make a scheduled payment. At that point, they will be in default and if the creditor has a security interest in the asset that is being used as collateral, they will have the ability to repossess it. The United States provides regulations that protect consumers from debt protectors, though these laws vary by state. Understanding Pennsylvania’s laws regarding this topic will help a consumer in the case of a repossession situation.
Is breach of the peace illegal in Pennsylvania?
Yes. In Pennsylvania, a repossession will be deemed unlawful if the repossession company breached the peace when taking a consumer’s vehicle. If they are actively in default, a repossession company can come at any time to take the vehicle but their actions are limited by the provision on the breach of the peace. Breach of the peace covers a number of disorderly behaviors and if violated, it counts as a criminal offense. Therefore, a vehicle’s repossession must be peaceful. The repossession company cannot force a consumer into giving up their vehicle with threats, using violence against them, or giving them misinformation regarding the repossession. Furthermore, they cannot damage or break into a consumer’s property during the repossession. For example, while the company is allowed to take the vehicle from an unsecured area on or around their property, they cannot break into a locked garage or gated area to repossess a vehicle. Additionally, the repossession company should stop the repossession if the consumer objects to their actions or asks them to leave their property. They can risk breaching the peace if they do not do so. In order to avoid the possibility of the consumer protesting the repossession, the repossession company may take the vehicle at night when they are asleep. If this occurs, a breach of the peace still could have taken place if the consumer finds that the company damaged their property during the repossession.
Is a pre-repossession notice required to be sent to a consumer?
No. In Pennsylvania, if a consumer has missed loan payments and is actively in default, the creditor does not need to send them a pre-repossession notice before coming to take their vehicle, as long as they have a lawful security interest in the vehicle.
What can a consumer do after repossession has occurred?
Even if the repossession has occurred, the consumer still has rights and the creditor still has to comply with a set of legal provisions in the remaining part of the process.
Immediately following the repossession of the vehicle, the creditor should send the consumer a notice that informs them of the repossession. The notice should contain information about their rights regarding the reinstatement of their contract, the balance that they still owe, where the vehicle is being held, and a reminder about the 30-day period they have to retrieve their personal items. However, if the consumer was at the scene when the vehicle was being repossessed, the repossession company should have allowed them time to take their personal belongings from the vehicle. The notice should also give the consumer information about their vehicle’s disposition. The creditor can choose to sell the vehicle at either a public or private sale but they must give the consumer a 15-day notice of the sale, as well as its time and place. If they can pay back the amount that they owe before the date of the sale, they will be able to reclaim their vehicle and reinstate their rights under their original loan agreement. Sometimes, a consumer may also have to pay for any reasonable fees that the creditor collected while repossessing their vehicle or setting up the sale.
The creditor is legally obligated to sell the vehicle at a commercially reasonable price. Most of the time, the auction price of the vehicle will be reasonable but if the creditor ends up selling the vehicle for a price much lower than its estimated market value, the sale could have been unlawful. After the sale has finished, the creditor has to send the consumer a notice that informs them of the results of the sale. This notice should contain the final selling price of the vehicle, as well as the balance that remains on their loan. The funds from the sale should be used to cover fees accrued by the creditor (such as repossession, storage, and sale costs) before they are applied to the loan balance. In the case that the sale of the vehicle is not enough to pay off these fees and the total amount of the loan, a deficiency will be generated. The deficiency balance is the amount of the consumer’s debt that is leftover and the consumer may be liable for owing this remainder of the money. However, if the sale of the vehicle brings in enough money to cover any fees plus their debt and there are funds leftover, the creditor must give the consumer the surplus.
What happens if a consumer’s vehicle was wrongly repossessed?
It is possible that a consumer’s vehicle was wrongly repossessed if the creditor or the repossession company did not adhere to Pennsylvania’s repossession laws. For example, the vehicle’s repossession may have been unlawful if the creditor did not send the consumer a notice of repossession and sale, or if they did not send them a post-sale notice. If either of these situations occurred, it is possible that the consumer will not have to pay the deficiency balance on their loan. Furthermore, the repossession could have been illegal if the repossession company breached the peace during the act or if they took a wrong vehicle that they did not have the right to repossess. In these cases, the repossession company may have violated a federal law that restricts the actions of debt collectors, the Federal Debt Collection Practices Act (FDCPA). Pursuant to this act, the repossession company could owe the consumer a compensation of up to $1,000 in statutory damages and could pay for their legal fees and any costs as well.
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 the consumer’s respective state can help a consumer with getting help and/or determining the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can assist as well.