Finding out that your creditor has repossessed your vehicle can be a stressful situation. You might not be sure what the seller will do with the vehicle, and before you receive a notice of sale, you might not even know whether you can reclaim your vehicle. While there are several laws and remedies available to the debtor in these situations, there are also restrictions placed on the creditor. One such restriction is on the sale of the car.
Selling the Vehicle
When a creditor repossesses your vehicle, he can typically choose from one of two options. He can either keep the vehicle, or choose to sell it. While keeping the vehicle can compensate him for the loss in value of loan, typically, he will choose to sell it, since he will be able to gain the amount owed on the loan. A creditor can choose between selling the vehicle in either a public or private sale. In either event, he must notify the debtor of the sale, and must notify the debtor of the location of the sale if it is a public sale. While these are some duties a creditor has during a sale, one of the most important duties a creditor has is to ensure that the sale is commercially reasonable.
Commercially Reasonable Sales
When you hear the term “commercially reasonable sale,” you might be tempted to think that the creditor would be prevented from simply selling the vehicle at a low price. While a low sale price might be an indication of a commercially unreasonable sale, there are other factors that are more determinative. These factors are:
-the manner of the sale;
-the time of the sale;
-the place; and
-the terms of the sale.
It is important to keep in mind that these terms are relative, and generally depend on the jurisdiction in which the sale is taking place. For example, a commercially reasonable sale in New York might not look the same as a commercially reasonable sale in Kansas.
A private sale is any kind of sale that is not open to the public, and is typically takes the form of a “dealer only” auction. While you might think that a private sale might be, on its face, commercially unreasonable, a private sale can be recognized as commercially reasonable under the law. Certain conditions, however, may make a private sale commercially unreasonable. These conditions include:
-whether the creditor can sell the car on the retail market;
-whether the creditor made an effort to attract buyers;
-whether the creditor sold the vehicle as junk without an appraisal; or
-whether the creditor purchases back the vehicle and resells it for more money.
A public sale is generally any sale that is open to the public, and provides debtors with an opportunity to reclaim the vehicle. As with private sales, it is possible for a public sale to be commercially unreasonable. Some factors that can indicate a commercially unreasonable public sale include whether the creditor provided the debtor with sufficient notice, and whether the creditor sold the vehicle for an unreasonably low bid at auction.
Contact an Attorney
The law regulating car financing and repossession can be complex and can prove to be stressful if you don’t have adequate representation. If you are looking for a dedicated attorney that will help you navigate the legal system in order to protect your rights, then contact the Bromberg Law Office, P.C. to make an appointment today.