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Repossessions: VERMONT

UCC Article 9: Vt. Stat. Ann. tit. 9A, §§ 9-101 to 9-709

Significant non-uniform amendments: Allows § 9-625(b) remedies for failure to give required notice of strict foreclosure; only secured party can be liable for actual damages and $500 statutory damages for most violations.

UCC Article 2A: Vt. Stat. Ann. tit. 9A, §§ 2A-101 to 2A-532

UCC Article 3: Vt. Stat. Ann. tit. 9A, §§ 3-101 to 3-605

Repossessions: VIRGIN ISLANDS

UCC Article 9: V.I. Code Ann. tit. 11A, §§ 9-101 to 9-709

Significant non-uniform amendments: Effective date is first day of next fiscal quarter following enactment date of February 20, 2002.

UCC Article 2A: V.I. Code Ann. tit. 11A, §§ 2A-101 to 2A-532

UCC Article 3: V.I. Code Ann. tit. 11A, §§ 3-101 to 3-605

Consumer leasing law: None.

Repossessions: WEST VIRGINIA

UCC Article 9: W. Va. Code §§ 46-9-101 to 46-9-709

Significant non-uniform amendments: None.

UCC Article 2A: W. Va. Code §§ 46-2A-101 to 46-2A-532

UCC Article 3: W. Va. Code §§ 46-3-101 to 46-3-605

Consumer leasing law: None.

Rent-to-own statute: W. Va. Code §§ 46B-1-1 to 46B-8-3

Repossessions: WISCONSIN

UCC Article 9: Wis. Stat. §§ 409.101 to 409.710

Significant non-uniform amendments: Did not enact new $500 statutory damages provision.

UCC Article 2A: Wis. Stat. §§ 411.101 to 411.901

UCC Article 3: Wis. Stat. §§ 403.102 to 403.605

Consumer leasing law: Wis. Stat. §§ 429.101 to 429.301

Rent-to-own statute: None.

Repossessions: WYOMING

UCC Article 9: Wyo. Stat. Ann. §§ 34.1-9-101 to 34.1-9-709

Significant non-uniform amendments: None.

UCC Article 2A: Wyo. Stat. Ann. §§ 34.1-2.A-101 to 34.1-2.A-532

UCC Article 3: Wyo. Stat. Ann. §§ 34.1-3-101 to 34.1-3-905

Consumer leasing law: None.

Rent-to-own statute: Wyo. Stat. Ann. §§ 40-19-101 to 40-29-120

Repossessions: 6.6.4.6 State Credit Statutes

State retail installment sales acts or other consumer credit laws often limit the charges that can be imposed in a credit transaction, and thus may prohibit a charge for a disabling device or for reinstating the contract after the vehicle has been disabled. In addition, if the device was not installed at the time of the original purchase, installing it upon default may violate a state credit code which lists the only steps that a creditor is allowed to take upon default.

Repossessions: 12.1.1 Importance of Defending a Deficiency Action

A creditor’s deficiency claim arises when the creditor sells repossessed collateral for an amount insufficient to pay off both the loan and the creditor’s repossession and disposition expenses. The deficiency is the difference between what is owed the creditor (the amount due on the loan plus the creditor’s expenses) and what is realized by the sale of the collateral. Although the sale may result in a surplus that must be paid to the debtor,1 usually the sale of repossessed consumer collateral results in a deficiency.

Repossessions: 12.1.2 How to Approach Defending a Deficiency Action

This chapter examines how to defend a deficiency action. However, an attorney defending a deficiency action should not merely think defensively. Usually when there is a basis to defend a deficiency suit there is also a basis to assert counterclaims under the UCC, other statutes, and the common law. Minimum statutory damages under U.C.C.

Repossessions: 12.2.1 Overview

The creditor has a right to repayment in full, and can bring a court action to recover the full amount of the debt. But, once the creditor seizes collateral securing that debt, the creditor’s right to repayment in full is limited by the UCC, other state law, and case law.4 That is, after disposing of the collateral, the creditor’s right to seek repayment of the balance due on the note (the deficiency) is restricted in certain respects.

Repossessions: 12.2.2.2.2 Other state law restrictions

Non-UCC state laws may also prevent creditors from cumulatively or simultaneously exercising their remedies. The UCC provision permitting the simultaneous exercise of remedies “does not override any non-UCC law, including the law of tort and statutes regulating collection of debts under which the simultaneous exercise of remedies in a particular case constitutes abusive behavior or harassment, giving rise to liability.”30

Repossessions: 12.2.2.2.3 Restrictions against double recovery

Even if there are no statutory restrictions against simultaneously repossessing the collateral and bringing suit, obtaining a judgment on the debt while holding the collateral may violate state rules against double recovery. If the creditor seeks judgment on the debt while still holding the collateral, it may be unable to produce satisfactory proof of the amount owed, thereby giving the court a basis to dismiss the suit.33

Repossessions: 12.3.1 Overview

The creditor has no right to seek a deficiency if the consumer at the time of the deficiency claim has completely satisfied the underlying obligation. Satisfaction can occur in a number of ways. The consumer may have paid the obligation in full, or may have purchased credit insurance through the creditor that should satisfy the obligation.43

Repossessions: 12.4.8 Has the Creditor Made an Election?

When an anti-deficiency statute forces the creditor to choose between retaining the collateral or seeking a money judgment, the question can arise whether the creditor’s actions should be treated as retaining the collateral.133 What if, after repossession, the creditor changes its mind, and decides not to retain the collateral?

Repossessions: 12.4.9 Remedies Under Anti-Deficiency Judgment Statutes

The obvious remedy under a state anti-deficiency judgment statute is preclusion of the deficiency judgment. Seeking a deficiency judgment contrary to the statute should also be a violation of the state unfair and deceptive practices (UDAP) statute.136 The advantages of a UDAP claim include a clear affirmative cause of action in all states, statutory damages or multiple damages in many states, and the potential of recovering attorney fees in most states.

Repossessions: 12.5.1 Overview

The UCC gives a secured party the option of strict foreclosure. A creditor that selects this option keeps the collateral in full satisfaction of the debt in lieu of selling it and seeking a deficiency. The procedures by which the creditor can initiate a strict foreclosure are discussed in , supra.

Repossessions: 12.5.2 Constructive Strict Foreclosure Under Former Article 9

Under former Article 9, many courts found that a creditor’s actions in using or discarding repossessed collateral, retaining it too long, or selling it to itself, amounted to strict foreclosure even though the creditor never sent a strict foreclosure proposal to the debtor or otherwise indicated an intent to select this option.138 In these circumstances, courts forced the creditor to retain the collateral in full satisfaction of the obligation, with no right to seek a deficiency.

Repossessions: 12.5.3 Overview of Constructive Strict Foreclosure Under Revised Article 9

Revised Article 9 undercuts the constructive strict foreclosure doctrine by providing that a “purported or apparent acceptance of collateral under [U.C.C. § 9-620] is ineffective unless” the secured party has gone through one of two procedures. The secured party must either have sent a proposal to the debtor for acceptance of the collateral in satisfaction of the debt (the debtor’s non-response is considered consent), or have obtained the debtor’s signature (or “authentication”) on an agreement to that effect.141

Repossessions: 12.5.5 Wrongful Use of Collateral

A creditor’s wrongful use of the collateral after repossession may also be a constructive strict foreclosure. For example, in one case under the previous version of Article 9, the creditor repossessed a truck, used it for his own purposes for four months, and then sued for the debt. The Alaska Supreme Court cited the creditor’s use of the truck as one of the factors persuading it that a constructive strict foreclosure had occurred.149

Repossessions: 12.5.6 Abandoning Collateral As Worthless

Destruction of the collateral while in the possession or constructive possession of the creditor also resulted in strict foreclosure under the previous version of Article 9, preventing the creditor from seeking a deficiency or suing on the underlying debt.155 Courts so holding reasoned that, when the creditor scraps the collateral as worthless with no notice to the debtor, the debtor does not have a chance to appraise the worth of the property and, by its actions in destroying the collateral, the creditor has elected to retain the property.