Short-term financial troubles can happen to almost anyone. When car payments fall behind, the phone may start to ring, and, eventually, the car may be repossessed. Fortunately for Connecticut’s consumers, state law provides many protections in the event of repossession. These protections are designed to provide consumers with an opportunity to prevent the loss of their car, to prevent finance companies from taking advantage of a consumer’s default, and to ensure that the consumer is credited with the fair value of the car.
Before repossessing the car, a finance company is allowed, but is not required, to send a notice of the amount the consumer must pay and the deadline to make that payment in order to prevent repossession. This notice must be hand-delivered or sent by certified or registered mail at least eleven days prior to the deadline to make payment. Many finance companies do not give consumers the full eleven days, and, as a result, may violate the law even if they wait beyond the deadline to repossess.
If a notice is not sent before the repossession, then a notice must be hand-delivered or sent by certified or registered mail not less than three days after repossession. That notice must inform the consumer of the right to redeem the car by making the past-due payments owed plus repossession and storage fees within fifteen days from the repossession. If this notice is not sent, then the finance company is not permitted to charge repossession or storage fees. The vehicle must be kept in Connecticut during that time period. Finance companies frequently ask for the entire balance owed on the loan, or fail to send the notice at all.
If the car is not redeemed, then the finance company must sell it within six months. Notice of the date after which the sale will take place must be given to the consumer. If the sale is by public auction, then the notice must state when and where the auction will be held. If the car is being sold pursuant to a private sale, then the notice must state the date after which a private sale might be conducted. All aspects of the sale must be commercially reasonable.
No later than thirty days after the sale, the finance company must give the consumer notice of how much the car sold for. In the notice, the finance company must give the consumer credit for the sale price or the fair market value of the car, whichever is greater. The finance company may deduct its expenses incurred in the sale, but it must give a full accounting. This is also an area where finance companies frequently fail to comply with the law.
The consequences of violating repossession laws can be very severe for finance companies. The consumer is usually entitled to a presumption that the value of the car was equal to the amount of the debt. This presumption often deprives the finance company from recovering any deficiency. Additionally, the consumer is entitled to recover for any loss or damages due to the violation of the repossession laws. Even if there are no actual damages, the consumer can recover statutory damages. The amount of statutory damages will depend upon the circumstances of the individual case and other factors such as the amount that has been paid on the loan, the original amount borrowed and the amount of the finance charge.
Finance companies must generally provide these notices and extend these rights and protections even if the consumer voluntarily returned the vehicle. These rights and protections do not apply to people who leased their cars instead of purchasing them.
Very frequently, repossessions are a result of a consumer’s decision to stop paying for a car that never ran properly or where there was fraud committed by the automobile dealer. Usually, and in almost all cases where the dealer arranged the financing, the consumer can raise against the finance company any defenses or claims that could be raised against the dealership. Finance companies often tell consumers that their complaints or defenses do not matter - - this is wrong!
Consumer Law Group, LLC 35 Cold Spring Road, Suite 512 Rocky Hill, CT 06067 860 571-0408 fax: 860 571-7457 Contact Us
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