COMMENTARY: Today I hate my job — post-repossession Article 9 letters
I don’t mean to alarm anyone with the title. Then again, maybe I do.
The truth is I’m discouraged, and today I hate my job. Why? Because it happened again.
A dealer reached out because they’ve been hit with a class action lawsuit. Once again, the claim surrounds post-repossession Article 9 letters, specifically the notice of intent to sell and the deficiency balance letters.
We’ve done webinars and podcasts on the subject. We’ve done numerous weekly tips. We’ve written articles. We present it at our conference every May, and it’s one of the key points I emphasize in every presentation. But still the message doesn’t spread as far as it should.
Now this dealer is faced with what could be a “bet the business” lawsuit to defend, and selling cars and collecting accounts will necessarily take a back seat to answering discovery, gathering documents, meeting with lawyers and preparing for depositions.
The legal fees alone can be crippling.
“I got audited by the state and they never said anything.”
“My collection attorney never mentioned this.”
“But they owe me money, how can they sue me?”
“We’ve been using this letter for years.”
I’ve heard all of these and more over the years. Sorry to burst your bubble with tough love, but these deflections are all meaningless.
As a creditor, compliance with the Article 9 post repossession requirements is mandatory, the rules are picky, and there are slight variances from state to state. As I’m prone to say, “there’s nothing worse than losing twice, once when the account goes into default, and again when you have to spend money defending yourself from an Article 9 claim.”
Get your letters examined at least annually by someone that’s qualified. Don’t rely on another dealer’s letters, don’t pass them around your 20 groups, don’t practice internet law and use one that someone has posted, and don’t think that it’s your regulator, bank or anyone else’s job.
Get your letters reviewed.
In the immortal words of Jim Malone in The Untouchables, “Thus endeth the lesson.”
If you have any questions, please reach out to Ignite Consulting Partners at info@ignitecp.com.
Steve Levine is an auto finance lawyer with 30 years of experience helping and protecting car dealers and finance companies. He is an owner and chief legal and compliance officer of Ignite Consulting Partners, which offers compliance, operational and best practices guidance and training. Please contact info@IgniteCP.com to learn more. Follow Steve on Twitter @LawyerLevine for compliance and industry related content.