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Repossessions: § 3954. Settlement of stayed cases relating to personal property

(a) Appraisal of property

When a stay is granted pursuant to this chapter in a proceeding to foreclose a mortgage on or to repossess personal property, or to rescind or terminate a contract for the purchase of personal property, the court may appoint three disinterested parties to appraise the property.

(b) Equity payment

Repossessions: § 3955. Termination of residential or motor vehicle leases

(a) Termination

(1) Termination by lessee

The lessee on a lease described in subsection (b) may, at the lessee’s option, terminate the lease at any time after—

(A) the lessee’s entry into military service;

(B) the date of the lessee’s military orders described in paragraph (1)(B) or (2)(B) of subsection (b), as the case may be; or

Repossessions: § 3957. Protection of life insurance policy

(a) Assignment of policy protected

If a life insurance policy on the life of a servicemember is assigned before military service to secure the payment of an obligation, the assignee of the policy (except the insurer in connection with a policy loan) may not exercise, during a period of military service of the servicemember or within one year thereafter, any right or option obtained under the assignment without a court order.

(b) Exception

Repossessions: 10.9.4 Special Statutory Protections Against Below-Market Resale Prices

If the collateral was sold at a low price to a secured party, a person related to a secured party, or a secondary obligor, revised Article 9 provides a special remedy to the debtor, requiring the creditor to credit the debtor with the proceeds that an arm’s-length complying sale would have produced.570 This protection against low-price repossession sales is discussed in detail in

Repossessions: 10.9.5.1 Using Pricing Guides and Internet Resources to Establish Market Value

One way to determine the cash value of a car or other collateral is to use a published pricing guide. Courts may use a car’s book value to get an idea of the car’s worth in the face of the secured party’s failure to prove that the price obtained upon resale was reasonable.574 The guides should be just as persuasive to help show that a repossession sale price is so low that the disposition was commercially unreasonable.

Repossessions: 10.9.5.2 Purchaser’s Resale Price

The price for which the purchaser of the collateral resold the property is another possible measure of its value.586 When the secured party purchases the collateral and then resells it, courts will closely scrutinize the price at the second sale in order to determine whether a substantially lower price at the first sale was commercially unreasonable.587

Repossessions: 10.9.5.3 Other Methods to Establish Market Value

The price the debtor originally paid for the property is a possible indicator of a reasonable value. For example, a sale is not commercially reasonable if the debtor buys a used car for $3000 and, after repossession a few months later, the dealer sells it for $300.

Repossessions: 10.10.1 Secured Party May Not Purchase at Private Sale

The secured party may not buy the collateral at a private sale.596 The official comments to Article 9 state that an auction must be open to the public if it is to be considered a public sale,597 so a dealer only auction is not a public sale. A secured party’s purchase at such a private sale thus violates Article 9, entitling the debtor to UCC remedies.

Repossessions: 10.10.2 Secured Party’s Purchase at Sham Public Sale or Commercially Unreasonable Public Sale

While a creditor may purchase the collateral at a public sale,604 an ostensibly public sale may in fact have been private.605 For example, even though the creditor labeled a sale a public auction, a court found it to be a private sale when it was conducted at the creditor’s place of business, with only the creditor’s employees present, and with inadequate public notice of the sale.606 If the creditor or a related party purchases the collateral at p

Repossessions: 10.10.3 Low-Price Sales to Insiders

Revised Article 9 creates a special remedy for some debtors when the collateral is sold to an insider at a low price. If the collateral is sold to the secured party or certain insiders, and the proceeds are significantly below the range that a commercially reasonable sale to a non-insider would have brought, then the debtor must be credited with the price that would have been realized at an arm’s-length sale.

Repossessions: 10.10.4.1 Does Transferring the Obligation or the Collateral Back to the Dealer Constitute the Article 9 Disposition?

It is common for sellers to assign consumer credit contracts to finance companies. For example, a Ford automobile dealership may assign a consumer’s installment sale contract to Ford Motor Credit Corp. Many of these assignments are “with recourse” or contain “repurchase agreements.” If the debtor defaults, the assignor dealer pays the assignee finance company all or part of the outstanding balance, and the finance company transfers the debtor’s contract and security agreement back to the dealer.

Repossessions: § 3958. Enforcement of storage liens

(a) Liens

(1) Limitation on foreclosure or enforcement

A person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.

(2) Lien defined

Repossessions: § 3959. Extension of protections to dependents

Upon application to a court, a dependent of a servicemember is entitled to the protections of this subchapter if the dependent’s ability to comply with a lease, contract, bailment, or other obligation is materially affected by reason of the servicemember’s military service.

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Repossessions: § 4011. Inappropriate use of chapter

If a court determines, in any proceeding to enforce a civil right, that any interest, property, or contract has been transferred or acquired with the intent to delay the just enforcement of such right by taking advantage of this chapter, the court shall enter such judgment or make such order as might lawfully be entered or made concerning such transfer or acquisition.

Repossessions: § 4012. Certificates of service; persons reported missing

(a) Prima facie evidence

In any proceeding under this chapter, a certificate signed by the Secretary concerned is prima facie evidence as to any of the following facts stated in the certificate:

(1) That a person named is, is not, has been, or has not been in military service.

(2) The time and the place the person entered military service.

Repossessions: § 4013. Interlocutory orders

An interlocutory order issued by a court under this chapter may be revoked, modified, or extended by that court upon its own motion or otherwise, upon notification to affected parties as required by the court.

Repossessions: § 4021. Anticipatory relief

(a) Application for relief

A servicemember may, during military service or within 180 days of termination of or release from military service, apply to a court for relief—

(1) from any obligation or liability incurred by the servicemember before the servicemember’s military service; or

(2) from a tax or assessment falling due before or during the servicemember’s military service.

Repossessions: § 4041. Enforcement by the Attorney General

(a) Civil action

The Attorney General may commence a civil action in any appropriate district court of the United States against any person who—

(1) engages in a pattern or practice of violating this chapter; or

(2) engages in a violation of this chapter that raises an issue of significant public importance.

(b) Relief

Repossessions: § 4042. Private right of action

(a) In general

Any person aggrieved by a violation of this chapter may in a civil action—

(1) obtain any appropriate equitable or declaratory relief with respect to the violation;

(2) recover all other appropriate relief, including monetary damages; and

Repossessions: § 4043. Preservation of remedies

Nothing in section 4041 or 4042 of this title shall be construed to preclude or limit any remedy otherwise available under other law, including consequential and punitive damages.

[Added by Pub. L. No. 111-275, § 303, 124 Stat. 2864, 2877 (2010).]

Repossessions: Listing of Provisions

TITLE 16. COMMERCIAL PRACTICES

CHAPTER I. FEDERAL TRADE COMMISSION

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SUBCHAPTER D. TRADE REGULATION RULES

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PART 444—CREDIT PRACTICES

Sec.

444.1 Definitions.

444.2 Unfair credit practices.

444.3 Unfair or deceptive cosigner practices.

444.4 Late charges.

444.5 State exemptions.

Repossessions: § 444.1 Definitions.

(a) Lender. A person who engages in the business of lending money to consumers within the jurisdiction of the Federal Trade Commission.

(b) Retail installment seller. A person who sells goods or services to consumers on a deferred payment basis or pursuant to a lease-purchase arrangement within the jurisdiction of the Federal Trade Commission.

(c) Person. An individual, corporation, or other business organization.