Repo Man: Tales from the Road, Lessons for Life III

Repossession agents really are more like privateers than pirates. We do the same kind of work, but we do it with the official consent of the powers that be. In this case, that means playing by the rules set down by the state, local, and federal governments.

Not all that long ago, an agent I knew ran into some serious trouble. It wasn't the business end of a gun, but it could have ended his career just as quickly. Nor was it the fangs of a guard dog, but its bite certainly hurt. It was worse than a breakdown, it was worse, even, than being sued.

What kind of monster could be so terrible? What diabolical entity could strike such fear into the modern Super-hero that is your friendly neighborhood repossession agent?

It's called the Fair Debt Collection Practices Act (FDCPA). Technically speaking, this law doesn't generally apply to the repo man, because he isn't there to get money from you. But it can come into play really quickly if the agent hooking up your car makes one tiny little mistake.

"Make your payment," he says.

If only he'd been more P.C...

While it is the literal truth - if you make your payments, you'll never see a repo man's face in the middle of the night - it is what I call a 'legally loaded' statement. From a legal standpoint, the repo man is only there to collect the collateral on a secured loan, not the past due payments that brought him there. If he makes so much as a reference to money, whether or not it was his intention to try to get a dime out of you, he instantly changes from a repossession agent to a debt collector, and that job has an entirely different set of rules.

He can say "Work things out with your bank," or "Call your bank," or even "I'm here to repossess your car for nonpayment." But if he says anything that might even hint that whipping out your checkbook might make the slightest bit of difference, he is now officially attempting to collect on the debt, not the vehicle.

And that is exactly what happened to my colleague. By telling the debtor to make her payment, all she had to do was tell the State Attorney General that she felt like she was being coerced, even threatened. What should have been a simple repo became, in the eyes of the state, a mafia-style shakedown. As an agent, there are few things more horrible than having an Attorney General breathing down your neck, brandishing a 'vote for me' pin inches from your jugular.

The only way to avoid unpleasant mishaps like that (or to catch them when they happen to you) is to know the laws. Since we're already on the FDCPA, let's get started there.

Under this Act, a "debt collector" is defined as:

"Any person who uses any instrumentality of interstate commerce or the mails, wherein any business, the principal purpose of which is the collection of any debts, or who Regularly Collects, or Attempts to Collect, directly or indirectly, debts owed or due or asserted to be owed or due to another."

In plain English, that means 'a person who tries to collect money owed.'

Now, the Act specifically excludes those it deems "security enforcers", or persons or entities whose principal business is enforcing security interests, and only that. The case Jordan v. Kent Recovery Services, Inc (D. Del. 1990, 731 F. Supp. 652) clarified that repossession agencies "fall outside the ... FDCPA", with the exception of sections 1692f(6a), (6b), and (6c), which reads:

Section f6: Taking or threatening to take any non-judicial action to effect dispossession or disablement of property [is a violation] if;

A: There is no present right to possession of the property claimed as collateral through an enforceable security interest;

B: There is no present intention to take possession of the property; or

C: The property is exempt by law from such dispossession or disablement.

In plain English, that's 'It is a violation (of the FDCPA) to threaten to repossess without doing so, or to repossess without the right to do so.' There are a couple of quirks here, like in subsection C, where it says "exempt by law"; that generally means that the collateral is protected by a pending bankruptcy, which we'll get into later, but there are other protections that can come into play as well, like the Soldiers and Sailors Civil Relief Act.

That said, other cases have found that repossession companies that also practice as debt collectors are subject to the FDCPA (Clark v. Auto Recovery Bureau of Connecticut, D. Conn. 1993, No. 5-91-294). That statute is exactly what got my colleague into trouble; by making a reference to past due payments to the debtor in way that could be taken as an effort on his part to collect those payments, he unwittingly subjected himself to the full force of the FDCPA.

That is a huge problem for a repossession agent, and for more than one reason. First of all, the threat of repossession without intent is already forbidden, and if the woman who's car was about to be towed had thought that she could make a payment on the spot and keep her car, then it means that money, and not the repossession, was the agent's main concern, which means he didn't have "intent". Second, by making a statement that could be taken as a threat ('Give me money or I'll take the car'), he's suddenly looking at an abusive collection practices violation. And, worst of all, since he's there in the middle of the night, and suddenly finds himself transformed into a debt collector, he is in violation for showing up in person, after hours, causing public embarrassment, and otherwise causing undue stress.

In short, he's in deep. All because he said one wrong word.

The moral of the story: Agents DO NOT mention money - ever. An agent can cause as much embarrassment as he pleases (as long as he doesn't "breach the peace", another topic we'll get to a little later on), but a debt collector can't. Your only clear route to stay clear of the FDCPA, and stay out of trouble, is to stay focused on the repossession, and only the repossession.

Even after the fact, should the debtor work things out with the bank and redeem the vehicle post-repo, money should never be brought up. Any amount due for storage, processing, and other incidentals, should be paid to the client, and billed on the invoice sent to the client for services rendered. I cannot stress this enough: agents ONLY get paid by the banks that hire them.

An agent can tell a debtor to call the bank, and should make it clear that all discussion of payment should be with them. They cannot offer anything that could be taken as legal advice, because that opens up yet another can of worms. Just stick to the job - or you will regret it, sooner or later.

As a final note on this topic, there are several states that require asset recovery agencies to be licensed as debt collection agencies as well, which means they must act in accordance with the FDCPA at all times. Anyone involved with a repossession, debtor or agent, should find out if their state is one of those, and act accordingly.

Another law to be wary of is the Gramm-Leach-Bliley Act, which protects the personal information of debtors. Under this act, it is unlawful to disclose certain information to anyone not involved in the recovery effort.

The protected information is pretty much obvious: social security numbers, bank account numbers, driver's license numbers, and other things like that. However, any information that isn't generally available to the public is technically prohibited. That means an agent can't call up the debtor's Aunt Sally and reveal that the debtor is up for repossession - because that isn't public information. Even the debtor's spouse can't be told, unless he/she is actually on the loan (and thus a debtor too).

It's a fair bet that a spouse might figure out what's going on when he/she sees a 35-foot flatbed start winching a car out of his/her driveway, but, still, it is forbidden to even admit the obvious. This restriction can lead to some pretty tricky situations.

I don't know how many times I'd pick up a car, then knock on the door only to find the actual debtor isn't home. Sometimes a husband will hold the loan on his wife's car; sometimes a mother will sign for her child. In many cases, the actual debtor, who is the only person an agent can discuss the repossession with, doesn't even live at the location where the vehicle actually is.

In my experience, the best way to bridge the gap is to state that the law prohibits me from saying exactly what's going on, but that "you look like a smart person - I'm here from (the bank), with a big tow truck, in the middle of the night... you can figure it out."

Unfortunately, sometimes they can't. Sad to say, there actually are people out there who, while legally allowed to drive on the roads, are totally unable to put 2 and 2 together to make 4. Other times, folks just insist that an agent spell things out for them. These people couldn't care less that they aren't legally entitled to know the details, and they certainly aren't concerned with the fact that the agent would be breaking the law to clue them in.

In those situations, it is best to clearly explain to the person at hand that you can only speak to the debtor about the matter, or, if that's not possible, that that person should speak to the debtor as quickly as possible, and inform him/her that he/she should contact the bank.

The worst-case scenario is when a car is blocked in by another vehicle, or in a garage, and the person who answers the door is one of those people. The vast majority of the time, that kind of person will tell you to take a hike: "You'll have to come back another time to talk to him/her yourself."

If you can't get the car, you can't get the car. Better to lose this round of the fight than to break this law, because someone in the family will know a lawyer, and will sue you.

However, it is important to remember that cooperation is not essential. Repo men can and will drag a car away without keys, full of personal property. If damage occurs because of a participant's refusal to turn over keys, then that's on them. This is by no means a license for an agent to do a sloppy tow job, but merely a protection against incidental damage that might result from non-cooperation.

That includes taking a blocked in car. An agent can't enter a garage without permission (even a detached garage - even if someone might be sleeping inside, it legally counts as part of the residence), but, in most areas, there is absolutely no restriction on using that big tow truck to move other cars out of the way, with consent or not.

A note of caution, though: if an agent causes any damage at all, even a scratch, to a car while moving it to get at the vehicle being repossessed, the agent is entirely liable (even with consent). My advice: it isn't worth the risk; come back for the car another time.

If you do have to leave a vehicle, make sure you get all the information humanly possible. Write down the plate number and the color, if the bank didn't supply those. Find out when the debtor will be home. Ask where he/she works, what the phone number is (both work and home), and confirm everything.

If it isn't too much trouble (or if you're feeling spiteful), do a condition report on the vehicle - which, as an agent of the bank, you're legally allowed to do. This will tell your client that you did your job to the fullest, and will give them information on the condition of the vehicle so that if the debtor does call, they'll be prepared to make an informed decision as to whether you should continue to attempt to repossess or close the file.

Sometimes, unaffiliated people (not on the loan), or even the debtor him/her self, will threaten to call the police. Believe it or not, that's one of the best things that could happen.

Every jurisdiction in the country requires that every repossession be reported to the police, be they local, county, or state authorities (you should always go to the closest station with jurisdiction to report a repo, just in case the debtor tries to call it in as stolen - which they do, even if they cooperated). If the debtor wants to bring the police to you, so much the better! It'll save you some time and fuel.

Most often, debtors just want to be reassured that the repossession is legal. Sometimes, however, they think that they can make you go away by being spiteful, or, as previously stated, they have a very poor understanding of the laws.

More often then not, the police involvement in a repo consists of the police telling the debtor that the repo order is legal, and that they have to comply. The police can't make them, but they can and usually do strongly suggest it. Occasionally, an officer will tell the repo agent to back off (usually because the officer doesn't feel like doing paperwork).

Unfortunately, if that happens, the agent has to move on for the time being. The sad fact is that once the police arrive, if the vehicle has not yet been hooked to the tow truck (the legal moment of repossession), then it is technically a breach of the peace, and the repo cannot take place once a breach has occurred.

A bit of advice for anyone out there who might someday find him/her self on the receiving end of a repo: calling the police, or doing anything for that matter, for the purpose of making the agent angry is a very bad idea. You would not believe the things you can be billed for. More to the point, if you fail to cooperate fully with the repossession effort, the agent will inform the bank when he reports the encounter, and the bank, in turn, may decide to not let you have your car back, or to pursue repossession efforts even if you make your payment.

In fact, acting in a respectful manner in every situation in life generally makes things easier. When you lash out, even due to justifiable frustration, you only make your own situation worse. People will be less prone to help you, or even try to see your point of view, and will sometimes even take great delight in your suffering. Have a little pride, and remember that respect is earned; show that you deserve it.

Here's another common misconception: 'The bank can't repo until I'm X days past due'.

Wrong. In the business, we have a phrase: One day or one dollar is all it takes. As a matter of fact, I have repo'd a truck over a matter of $1.06. While most banks will not issue a repossession order until a loan is 60 or 90 days past due, that does not mean they can't. All it takes is a single violation of the terms of the contract - even just changing jobs without telling them is technically enough.

Of course, no bank will repo you for getting a different job; they don't care, as long as you make your payments, because they really just want your money, not the car. The point is that they could.

Finally, we conclude our session on federal law with the Soldiers and Sailors Civil Relief Act. The idea behind this law is that those people who bravely choose to serve our country in the military should be given special consideration for the civilian obligations they incurred before joining up. This act does not apply to any contracts signed after enlisting in the armed services (but does apply to a reservist who is called up to active duty).

To put it as simply as possible, an agent cannot repossess anything from a person protected by this law (or his/her dependants) without first getting approval from that service member's commanding officer (usually a base commander). The key to determining if the law applies is to check when the loan was signed against when the service member was sworn in: if the contract was made after enlistment, then an agent can treat it like any other repo (but still has to get clearance to physically go on to a base, if applicable). If the loan was signed first, then the law applies (except for reservists, then the law takes effect again with every deployment).

If this law does prohibit you from going after a vehicle, then you can't pursue it; you have no choice but to send the file back to the bank, and have their legal department make the arrangements with the military command staff. You'll just have to sit on your thumb until they (not the bank) give the o.k. The same goes for the dependants of a service member (husband/wife, kids, etc.), even if none of them actually live on a military installation.

That pretty much covers it for federal law, except for bankruptcy, which is a whole other animal. Next, we'll look at state law, and the Uniform Commercial Code. The UCC doesn't just tell agents what not to do, but helps with establishing what they can do.

Stay tuned for the next exciting chapter of Repo Man: Tales from the Road, Lessons for Life.