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Repossessions: 11.3.2.2.1 Acceleration treated as prepayment in computing rebates

The total of payments for a precomputed credit transaction (one in which the contract obliges the consumer to pay the total of payments, that is, the amount financed plus all the finance charges for the full term of the loan, as opposed to an interest-bearing transaction, which is one in which the consumer is required to pay the amount financed plus interest earned from time to time on the unpaid balance65) includes interest payments over the full term.

Home Foreclosures: 17.4.2.1 Introduction

When a sale-leaseback or inter vivos trust transaction is found to be a disguised loan (or equitable mortgage), it is subject to the Truth and Lending Act (TILA)224 to the same extent as an explicit secured loan transaction.225 When TILA applies, it requires a creditor to disclose certain important information about the credit terms to the consumer in writing prior to consummation of a credit transaction.

Truth in Lending: 2.8.5 Land Contracts

Land contracts, also known as contracts for deed or land installment agreements, are installment agreements for the purchase of real property. They often are offered to low-income families as a way to acquire a home. However, the promise of homeownership may be illusory, as many land contracts are written so that any default in payment results in forfeiture of all the payments made toward the home.

Fair Credit Reporting: 2.3.6.3.1 Introduction

The definition of “consumer report” incorporates two separate references to credit uses. First, the definition directly includes information collected or used for establishing the “consumer’s eligibility for . . . credit . . .

Truth in Lending: 2.6.3 Regularly Extends Consumer Credit

While the meaning of “consumer credit” is discussed elsewhere,180 the definition of “regularly” deserves careful attention. The burden is on the borrower to establish that the lender “regularly” extends credit.181 Because creditors have more information about the frequency of their lending activities than consumers, courts should permit discovery on these questions.182

Truth in Lending: 2.7.9.5.4 McCarran-Ferguson Act

Occasionally creditors have argued that the congressional deference to state regulation of insurance mandated by the McCarran-Ferguson Act592 prohibits application of TILA to insurance. This argument has generally failed.

Truth in Lending: 2.8.10.2 EWA Programs Extend Credit

To date there is no case law directly addressing whether earned wage advance programs create “debt” or extend “credit” within the meaning of TILA.765 The CFPB’s activity is discussed in the next section. Notwithstanding providers’ claims to the contrary, there is a strong argument that EWA providers extend credit as defined by TILA.

Repossessions: 6.1 Introduction

This chapter analyzes debtor protections when secured creditors use self-help repossession to seize collateral. Self-help repossession is an extraordinary remedy. Not only does it reduce the ability of debtors to protect their rights, but permitting secured creditors and under-regulated repossession agents to take away an owner’s property endangers the lives of debtors, repossession agents, and the public.

Repossessions: 6.2.1 Voluntary Surrender

Debtors who are in default and unable to meet payments can surrender the collateral to the secured party, rather than wait for the creditor to repossess. By delivering the collateral to the creditor, a debtor may save money by avoiding repossession costs.

Repossessions: 6.2.2 Other Pre-Repossession Options

Repossession may be avoided by refinancing. A surprising number of consumers who have decent credit records and other borrowing options are persuaded to finance at the dealership at high rates. Refinancing might reduce the monthly payment to an amount the debtor can afford.

Repossessions: 6.2.3 False Threats to Repossess

Whether the threat to repossess is unlawful is an important initial area of inquiry. Sometimes creditors or debt collectors threaten to repossess collateral when they have no present right to repossess or no intent to do so. Several state debt collection practices acts specifically prohibit debt collectors from falsely threatening to repossess collateral,21 and more general prohibitions in other state debt collection acts arguably apply to this practice as well.

Repossessions: 6.2.4.1 When Clients Should Object

A debtor’s attorney should consider several steps to assist a client threatened with repossession. The attorney can notify the creditor, preferably in writing, that the creditor is not allowed on the debtor’s property, that the debtor objects to any repossession attempts, and that the creditor should not use force, threats, or intimidation to obtain the collateral.

Repossessions: 6.2.4.3 Possible Civil Liability for Hindering Repossession

The debtor should also consider the potential non-criminal consequences of resisting repossession. For example, some state statutes provide that the buyer may be liable for damages to the seller if, after default and demand, the buyer fails to make the collateral available or wrongfully damages the collateral.56 An attorney also may run afoul of state ethical rules by advising or suggesting that a client conceal collateral.57

Repossessions: 6.3.1 Overview

The UCC authorizes the secured party on default to take possession of the collateral without judicial process if that can be done without breach of the peace.61 The UCC thus generally permits self-help repossession that does not breach the peace, a standard analyzed in § 6.4, infra.

Repossessions: 6.3.2 Statutes Prohibiting Repossession

The Wisconsin Consumer Act limits the creditor to judicial action—a judgment or restraining order—to recover collateral other than a motor vehicle, unless the debtor voluntarily surrenders the property.65 Even if a creditor has obtained a judgment from a court, if the court did not have competent jurisdiction an aggrieved debtor may bring suit under the Wisconsin statute for wrongful repossession and collect damages from the creditor.66

Repossessions: 6.3.5.1.1 Introduction

The Servicemembers Civil Relief Act (SCRA)101 gives military personnel and their dependents significant protection against self-help repossession. Formerly titled the Soldiers’ and Sailors’ Civil Relief Act of 1940, it was completely rewritten in 2003.

Repossessions: 6.3.5.1.2 Which servicemembers are protected

Generally, to be entitled to the Act’s protections, the servicemember must be in “military service,” defined in large part as active duty.108 Active duty includes full-time training duty, annual training duty, and attendance at a military school while in active military service.109 National guard members called to active service by the President or Secretary of Defense for more than thirty consecutive days for the purposes of responding to a national emergency declared by the President and suppo

Repossessions: 6.3.5.1.3 Prohibition against self-help repossession

The federal Act prohibits creditors from using self-help repossession114 if the debtor paid at least one installment or a deposit before entering military service.115 It also prohibits rescinding or terminating a covered contract because of a breach of the contract that occurs before or during the servicemember’s period of active duty.116 These prohibitions apply to contracts for the purchase of real or personal property, including a motor vehicle,

Repossessions: 6.3.5.1.4 Protections when creditor seeks judicial order to repossess

If the creditor brings a judicial action to recover the collateral, the Act prohibits the entry of a default judgment against a servicemember who has not made an appearance, unless an attorney is appointed to represent the servicemember.129 A servicemember who has received notice of the proceeding may also be entitled to an initial stay of the proceeding for at least ninety days.130 The stay may be obtained by submitting documentation showing that military service materially affects the servicem