California Repossession Law Blog

Many of you have called or emailed about Fireside Bank's repossession of your vehicle. You are hoping that you are included in our Fireside class action settlement. That settlement resulted in Fireside clearing class members' credit reports of Fireside's tradeline. The settlement also required Fireside to reduce class members' obligations to zero.

California law requires repossessing finance companies to exactly comply with the law when they send post-repossession notices of intent to dispose (NOIs). If the finance company makes a mistake, then the defaulting consumer does not owe any deficiency following the repossession sale. We reached the Fireside settlement because Fireside's NOIs from October 2003 to October 2007 did not comply with California law.

Fireside changed its NOIs in October 2007. Therefore, unfortunately the Fireside settlement class does not include consumers who received NOIs past October 2007.

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Fireside Bank settlement class members who made payments to Fireside after their vehicles were repossessed are entitled to a 90% refund of those payments. Checks were initially mailed several months ago. Most class members cashed or deposited their checks long ago.

If you received a settlement check from the Fireside Bank settlement but have not cashed your check, you must cash it or deposit it right away! Otherwise your check will go "stale" and you will not be able to cash it at all.

Also, if you are a Frieside Bank settlement class member and you paid Fireside after your car was repossessed, but you haven't received a settlement check, you must notify the settlement administrator right away! Please call Joni Brown at Rosenthal & Co, 415-798-5942, with your contact information.

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Fireside Bank Settlement Class Members who paid money to Fireside after their cars were repossessed were scheduled to receive refund checks next week. However, as I mentioned in my last post, Fireside had not provided accurate records of payments it collected in 2009. Less than three weeks ago, Fireside finally provided new collection information to the Settlement Administrator regarding Settlement Class Members' 2009 payments. The Settlement Administrator had to input and process that new information. As a result, settlement checks will be delayed for two weeks. They are now scheduled to be mailed on September 11.

This delay does not affect Fireside's obligation to instruct the credit reporting agencies to delete Fireside's tradeline, regardless of whether you paid money to Fireside after your vehicle was repossessed. Nor does this affect Fireside's obligation to reduce the amount you owe to Fireside to zero. Fireside was required to take those steps by August 8, 2009.

Check your credit report in mid-September or so to be sure Fireside's tradeline has been deleted from your credit report. If you need help with a credit problem due to Fireside's tradeline remaining on your credit report, you can call me at 415-861-2265 or email me at carol@kaboblaw.com.

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If you received a Class Notice in the Fireside Bank class action settlement, watch your calendar. The "Effective Date" for the settlement is this week, July 29. Ten days after the Effective Date--no later than August 8--Fireside must change all of its records to show that Class Members owe nothing to Fireside. It must also request the credit reporting agencies to delete Fireside's tradeline on Class Members' credit reports.

Class Members should check their credit reports in mid- to late September to be sure Fireside's tradeline has been removed.

Class Members who have paid money to Fireside after their vehicles were repossessed will be mailed their refunds pursuant to the settlement within 30 days of the Effective Date--no later than August 28. Members of the Gonzalez class, who received Fireside's NOIs in 2000 and 2001, will receive back 100% of those payments. Lind class members, to whom Fireside sent NOIs between 2003 and 2007, will be refunded 90% of their payments.

However, if you are a Class Member and made a payment to Fireside Bank in 2009, Fireside may not have accurate records of your 2009 payments. You won't receive a refund without accurate records. Please call me at 415-861-2265 or email me at carol@kaboblaw.com if you received a Class Notice and made a payment in 2009.

We want to be sure that Class Members get all the relief to which they are entitled.

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Our proposed class action settlement with Fireside Bank was finally approved by Santa Clara Superior Court Judge Elfving on May 29. This is great news for the approximately 17,500 members of the Gonzalez settlement class--California consumers to whom Fireside sent post-repossession notices of intent to dispose (NOIs) between May 2000 and October 2001--and the Lind settlement class--people to whom Fireside sent post-repossession NOIs between October 2003 and October 2007.

Gonzalez settlement class members will be refunded 100% of the post-repossession payments they made to Fireside. Lind settlement class members will be refunded 90% of their post-repossession payments. These payments will be mailed by the Settlement Administrator, Rosenthal & Company, no later than August 28, 2009.

In addition, Fireside is required to change its account records to show that each settlement class member has a zero balance with Fireside. It must instruct the credit reporting agencies, Experian, Equifax and TransUnion, to delete Fireside's tradelines on class members's credit reports. And it must recall all collection efforts against settlement class members. Finally, upon request from any settlement class member, Fireside must send that person a letter which confirms that their account balance is zero.

Fireside is required to take these actions no later than August 10, 2009. Therefore, if you are a settlement class member, you should check your credit report around the middle of September to be sure that Fireside's tradeline is deleted.

Continue reading "Fireside Bank Repossession Class Action Settlement is Finally Approved" »

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Suppose your car was repossessed, recently or years ago. You were having financial difficulties. Maybe you tried to reinstate your contract. Perhaps you were having problems and voluntarily surrendered your vehicle. In the end, you were unable to get your car back and the lender sold your car.

You may have received some letters from the lender--or a collection agent--demanding that you pay the deficiency, the amount remaining on your contract after the lender applied the sale proceeds. You may have ignored those letters. You may have made a payment or two.

Now suppose you have been sued for the deficiency. The lender has added interest to that amount, perhaps thousands of dollars of interest. Do you have any defense to that deficiency claim? Or should you just let the lender get its default judgment against you?

If you bought your vehicle for personal or family use and you live in California, you often have a defense to a deficiency claim. Contact us if you have been sued. We will review your papers and evaluate whether you have a defense, at no charge to you. Because we only take cases we think are meritorious, we never charge our clients.

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Persons whose vehicles were repossessed by Arcadia Financial, who received a post-repossession notice of intent to dispose (NOI) between November 1, 2002 and September 25, 2007 and against whom Arcadia sought a deficiency are--with minor exceptions--members of the Settlement Class in Juarez v. Arcadia.

In an earlier post, we reported that the San Diego County Superior Court finally approved the proposed class action settlement in January. Arcadia Financial (now CitiFinancial Auto) has now funded that settlement. That means the settlement administrator, Rosenthal & Company, will be sending checks to persons who made deficiency payments to Arcadia, within the next week or so. If you are a class member and made a deficiency payment to Arcadia after your car was repossessed, check your mailbox!

In addition, Arcadia is required to take steps so that all class members' records will reflect that they do not owe Arcadia anything on account of their deficiencies, whether they made any payments or not. Arcadia must change its internal records so that each class member's account reflects a zero balance. If an outside collection agency was trying to collect, it must recall those collection efforts. It must instruct the three credit reporting agencies, Equifax, TransUnion and Experian, to delete Arcadia's tradeline on class members' credit reports.

Arcadia's deadline for taking these steps has passed. However, it often takes a while for credit reporting agencies to change their records. If you are a class member, check your credit report next month to be sure it shows a zero balance owed to Arcadia.

Continue reading "Checks To Be Mailed in Arcadia/CitiFinancial Class Action" »

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If your vehicle was repossessed and sold, the bank or finance company may have sold its right to claim the resulting deficiency to a debt collector. The "deficiency" is the amount still owing on the conditional sale contract after the vehicle sale proceeds were applied. If you did not voluntarily pay that deficiency, the debt collector may decide to file a lawsuit to collect it.

Why are finance companies selling their rights to collect on deficiencies? In these tough economic times, they may simply prefer to collect a few sure dollars now rather than a few more dollars down the road. But sales to debt collectors can also be an indication that the right to collect a deficiency is growing stale. In other words, the statute of limitations may be about to run on the deficiency claim. Creditors are not supposed to sue on claims that are brought outside the limitations period.

For example, if your vehicle was repossessed more than four years before a debt collector files a deficiency lawsuit, the four-year statute of limitations for breach of contract can bar the debt collector's claim. But the statute of limitations is not an automatic defense; the consumer must appear and bring that issue to the court's attention.

Appearing and defending in court can be intimidating to most consumers, even if they know they have a defense. Because very few consumers ever appear in court, most of these deficiency lawsuits result in default judgments for the debt collectors. Then, once debt collectors obtain a judgment--even if the lawsuit was barred by the statute of limitations--they can garnish wages or lien property to get their judgments paid. At that point, there is little or nothing the consumer can do.

If you are sued by a debt collector for a deficiency, look carefully at the grounds for its deficiency claim. if you have questions, we may be able to help you.

Posted by Carol McLean Brewer | Permalink | Email This Post

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Our law firm represents consumers whose cars were repossessed. Many of those consumers are being sued by the bank or finance company that repossessed the vehicle. We review the post-repossession Notice carefully to determine whether the creditor has complied with California repossession law. If the Notice does not comply with the law, then the consumer is not liable for any deficiency remaining after the vehicle is sold and the sales proceeds are applied to the outstanding contract balance.

In some cases, however, national banks have argued that they do not need to comply with California law because the California notice requirements are preempted by federal regulations pursuant to the National Bank Act. Although there are no federal laws or regulations that deal with the contents of post-repossession Notices, the banks argue that California notice requirements impermissibly interfere with their ability to lend money and to collect all that is owed. They have argued that forcing banks to comply with state-law notice requirements is an obstacle to the accomplishment of certain objectives under the National Bank Act.

We have vigorously opposed these preemption arguments. In fact, our law firm has several pending cases where federal preemption is an unresolved issue. But the U.S. Supreme Court issued an opinion yesterday called Wyeth v. Levine that may help settle this issue in the consumer's favor.

Wyeth v. Levine has nothing to do with national banks, repossession or lending. It concluded that consumers could continue to sue drug companies for personal injuries in state court, notwithstanding that the drug labels had been approved by the Federal Drug Administration. But similar to the banks' arguments in repossession cases, the drug company argued that permitting injured consumers to sue for compensation was an obstacle to the accomplishment of the FDA’s safety objectives. The Supreme Court rejected that argument. The Court also recognized that state law tort remedies were not inconsistent with the FDA's objectives, but rather were complementary to them.

We believe the same is true in repossession cases, that state-law repossession requirements are complementary to the National Bank Act's regulations. Federal preemption would leave a vacuum in which nothing would specify the contents of post-repossession Notices, with disastrous consequences. But our trial courts will decide that issue, not us. Check back for further developments.

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The AP has a report that repo violence is increasing. Repossession companies may not "breach the peace" or engage in violence, but the potential for violence is present as explained in the report.

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Santa Clara Superior Court Judge Kleinberg preliminarily approved a class action settlement on February 10. The settlement class combines certified classes in two lawsuits, Gonzalez and Lind. It includes California residents whose cars were repossessed and to whom Fireside Bank sent notices of intent to dispose (NOIs) from May 2000 to October 2001 (Gonzalez), and also persons who received Fireside's NOIs dated October 2003 through October 2007 (Lind). The settlement administrator will send Class Notice explaining the settlement in more detail in a few weeks. Judge Kleinberg will conduct a final hearing on the proposed settlement on May 29, 2009 at 9:00 a.m. at the Santa Clara County Superior Court in San Jose.

Our law firm had contended that Fireside's NOIs did not comply with California law on vehicle repossessions. Therefore, we argued that persons to whom Fireside had sent those NOIs were not liable for any deficiency remaining after Fireside sold their repossessed vehicles and applied the sales proceeds to the contract. Both cases were hard-fought. Gonzalez even went to the California Supreme Court, which decided the case was properly certified as a class action. (You can look it up: see Fireside Bank v. Superior Court, 40 Cal.4th 1069 (2007)). But no court had ever decided the legal issue of whether Fireside's NOIs complied with California law. Before the court decided the legal issue, the parties agreed to resolve the two lawsuits.

Fireside has agreed to reduce the amout of any deficiency that settlement class members owe to zero. Also, it will instruct the three credit reporting agencies, Equifax, Experian and Trans Union, to delete their tradeline from class members' credit reports. Finally, class members who paid Fireside after thier cars were repossessed will get their money back. Gonzalez class members will recover 100% of the money they paid, while Lind class members will get back 90% of their money. About $4.5 million has been set aside to pay settlement class members.

If you think you fit the description of a settlement class member (see above) but Fireside already obtained a judgment against you, you are unfortunately not part of the settlement. Judge Kleinberg decided that he could not disturb the ruling of whatever courts entered the various judgments. But the issue of whether judgment debtors can re-open the circumstances of their judgments is now on appeal before the California Court of Appeal. The appeal may affect your rights in the future, but not for the present.

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Judge Barton of the San Diego County Superior Court finally approved a class action settlement against CitiFinancial Auto and its predecessor, Arcadia Financial, last Friday, January 2, 2009. This is great news for settlement class members, those whose vehicles were repossessed and who received CitiFinancial Auto's post-repossession Notice between November 1, 2002 and September 25, 2007, and against whom CitiFinancial Auto asserted the right to a deficiency or who paid money after their vehicles were repossessed and were unable to get their vehicles back.

Most of the settlement class members did not pay anything after their vehicles were repossessed. But CitiFinancial's claim to a deficiency has been on their credit reports, lowering their credit score. In addition, they may have been pursued by collectors for that money. The settlement means that CitiFinancial Auto will clear their credit reports of its tradeline. It will also reduce the amount owed to zero. The settlement means that CitiFinancial "gives up" its right to collect about $43 million in deficiencies!

More than 900 settlement class members paid money to CitiFinancial Auto after their vehicles were repossessed. In addition to having their credit reports cleared, those folks will be refunded that money, plus interest at 7% per year, from the date of the payment until June 30, 2008. CitiFinancial Auto will fund a $3.2 million settlement fund to pay these class members.

When will all this happen? CitiFinancial Auto must clear credit reports and zero out the amount class members owe by March 23, 2009. Class members should check their credit reports after that to be sure those reports no longer include any obligation to CitiFinancial Auto.

Class members who made post-repossession payments are to receive their refunds within 30 days of April 2, 2009.

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