What happens when the repo man calls?
Q. I'm actually asking this on behalf of my brother cause I know he'll never do it.
His truck was repossessed a year ago. The bank that held the title sold it and they're trying to collect the difference between what he owed and what they sold it for. They turned the case over to a collections law firm. He's been dodging their phone calls cause the difference is still several thousand dollars and he just doesn't have the money -- that's why the truck was repossessed in the first place.
What can he do to resolve this issue -- does he need to have a lawyer to act on his behalf, can I act on his behalf? I'm willing to discuss this with them and set up some kind of re-payment plan but I don't know where I stand legally cause I'm his sister not his wife.
A. You’ve got a couple of issues going on here. The first is your brother’s failure to pay for the truck. The second is your desire to act on his behalf (which, by the way, is really commendable. He’s lucky to have you on his side.) I’ll answer your second question first.
You can act on your brother’s behalf, BUT . . . (there’s always a but). The bank, or lending company, or collection agency may not talk to you because you are not on the account. With all of the privacy and confidentiality laws out there now, companies usually don’t have to (and usually don’t want to) talk to anyone but the debtor or the debtor’s legal representative. Part of that is privacy, and part of that is because you can’t commit your brother to do anything. You can promise the moon and the stars, but if the company relies on you, and then your brother says no, what have you accomplished?
You could have your brother give you “power of attorney” to conduct business on his behalf. He would have to sign a form (and usually debt collectors require a form that’s notarized) that gives you the authority to conduct business on his behalf. To protect yourself, it should be a limited power of attorney form that both limits the scope of what you can do, and protects you from actually becoming a target. (You want to act on your brother’s behalf; you don’t want to assume his debts.) You can, but certainly don’t have to, act on your brother’s behalf. But in the long run, it’s his responsibility.
As to the first part of your question, your brother’s obligations on the truck are usually defined by the financing agreement. Most of the time, the agreement explains what happens in the case of a repossession. Hypothetically, let’s say your the truck was worth $10,000 when new, and that’s the amount your brother financed. Let’s say your brother paid $2400 over two years before it was repossessed, leaving a $7600 balance. If the bank sold the truck for $5000, your brother could owe the difference of $2600 if that is what the financing agreement requires. (Of course, you should read the financing agreement carefully. Although it’s not likely, the agreement may provide that the bank’s only remedy is repossession and sale, without any provision for payment of the difference between the sale price and the amount still owing under the original agreement.)
If this is your brother’s situation, you can still negotiate, either by trying to reduce the total amount or by making monthly payments on it. Keep in mind that these collection firms usually get paid a percentage of what they collect (20% to 33% is the range I’ve seen), so they don’t have much incentive to reduce the total amount and take payments. They’ll usually do either/or (but it doesn’t hurt to ask if they’ll do both).
Your brother should come up with a realistic figure that he can honestly meet, either a discounted lump sum (like paying $2000 on a $2600 balance) or a monthly payment. Then, haggle. If they’re looking for $2600, and he can pay $2000 today, offer $1400 in order to eventually get to $2000. The same goes for monthly payments. If he can comfortably make $100 payments each month, he should offer $75 for however many months it takes to get the balance paid off, with the goal to be to settle at $100. Then, if the company takes $75 per month, he’s a little ahead of the game.
The only caution is that, if he makes an agreement, he’s got to abide by it. Otherwise, the agreement would likely be rendered void by his failure to abide by it, and the whole debt will become due.
Finally, he doesn’t necessarily need a lawyer to negotiate a settlement like this. However, if it looks like there are some clauses in the financing statement that might get him off the hook, or if there’s a large amount of money involved, your brother might consider taking it to a lawyer and getting an opinion about what his obligations and options are. Obviously, the amount he owes makes a difference here; if he owes $2000, it’ll probably be cheaper just to pay it. If he owes $22,000, it might make more sense to consult with a local attorney.
Good luck.
His truck was repossessed a year ago. The bank that held the title sold it and they're trying to collect the difference between what he owed and what they sold it for. They turned the case over to a collections law firm. He's been dodging their phone calls cause the difference is still several thousand dollars and he just doesn't have the money -- that's why the truck was repossessed in the first place.
What can he do to resolve this issue -- does he need to have a lawyer to act on his behalf, can I act on his behalf? I'm willing to discuss this with them and set up some kind of re-payment plan but I don't know where I stand legally cause I'm his sister not his wife.
A. You’ve got a couple of issues going on here. The first is your brother’s failure to pay for the truck. The second is your desire to act on his behalf (which, by the way, is really commendable. He’s lucky to have you on his side.) I’ll answer your second question first.
You can act on your brother’s behalf, BUT . . . (there’s always a but). The bank, or lending company, or collection agency may not talk to you because you are not on the account. With all of the privacy and confidentiality laws out there now, companies usually don’t have to (and usually don’t want to) talk to anyone but the debtor or the debtor’s legal representative. Part of that is privacy, and part of that is because you can’t commit your brother to do anything. You can promise the moon and the stars, but if the company relies on you, and then your brother says no, what have you accomplished?
You could have your brother give you “power of attorney” to conduct business on his behalf. He would have to sign a form (and usually debt collectors require a form that’s notarized) that gives you the authority to conduct business on his behalf. To protect yourself, it should be a limited power of attorney form that both limits the scope of what you can do, and protects you from actually becoming a target. (You want to act on your brother’s behalf; you don’t want to assume his debts.) You can, but certainly don’t have to, act on your brother’s behalf. But in the long run, it’s his responsibility.
As to the first part of your question, your brother’s obligations on the truck are usually defined by the financing agreement. Most of the time, the agreement explains what happens in the case of a repossession. Hypothetically, let’s say your the truck was worth $10,000 when new, and that’s the amount your brother financed. Let’s say your brother paid $2400 over two years before it was repossessed, leaving a $7600 balance. If the bank sold the truck for $5000, your brother could owe the difference of $2600 if that is what the financing agreement requires. (Of course, you should read the financing agreement carefully. Although it’s not likely, the agreement may provide that the bank’s only remedy is repossession and sale, without any provision for payment of the difference between the sale price and the amount still owing under the original agreement.)
If this is your brother’s situation, you can still negotiate, either by trying to reduce the total amount or by making monthly payments on it. Keep in mind that these collection firms usually get paid a percentage of what they collect (20% to 33% is the range I’ve seen), so they don’t have much incentive to reduce the total amount and take payments. They’ll usually do either/or (but it doesn’t hurt to ask if they’ll do both).
Your brother should come up with a realistic figure that he can honestly meet, either a discounted lump sum (like paying $2000 on a $2600 balance) or a monthly payment. Then, haggle. If they’re looking for $2600, and he can pay $2000 today, offer $1400 in order to eventually get to $2000. The same goes for monthly payments. If he can comfortably make $100 payments each month, he should offer $75 for however many months it takes to get the balance paid off, with the goal to be to settle at $100. Then, if the company takes $75 per month, he’s a little ahead of the game.
The only caution is that, if he makes an agreement, he’s got to abide by it. Otherwise, the agreement would likely be rendered void by his failure to abide by it, and the whole debt will become due.
Finally, he doesn’t necessarily need a lawyer to negotiate a settlement like this. However, if it looks like there are some clauses in the financing statement that might get him off the hook, or if there’s a large amount of money involved, your brother might consider taking it to a lawyer and getting an opinion about what his obligations and options are. Obviously, the amount he owes makes a difference here; if he owes $2000, it’ll probably be cheaper just to pay it. If he owes $22,000, it might make more sense to consult with a local attorney.
Good luck.
posted by David Kendall at
11:27 PM
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