Discussion Question One - Done
You take your car to a mechanic because it’s been making a strange noise. When you come to pick it up, the mechanic cranks up the engine for you. You think you can hear the same noise. The mechanic says you owe him $500 and refuses to give you the keys unless you pay up. Can the mechanic keep your car? If so, why? If not, why not?
In some states but not all, a lien will allow the mechanic to actually retain your car if you do not pay the full bill. You should keep in mind that many states will allow a mechanic to follow the lien procedures, including keeping your car. However, the law may subject them to serious consequences if they are incorrect in following procedures, or if they are wrongful in their conduct. For example, some states allow you to sue to recover the extra amount which was to be paid, and to recover punitive damages from the mechanic if the mechanic's conduct was reckless or willfully designed to cause you harm.
So the answer is: The mechanic can keep your car in some states if you refuse to pay. More about this topic:
Discussion Question Two - Renee - Done
Most states require security interests in automobiles to be noted on the title. What’s the
law in Texas? If you’ve financed your car, what does the title say about the lender’s interest?
I had to get help from my loan officer at my bank, because believe it or not I did not have any of my titles so I could verify and answer this questions.
When you finance a car either new or you put one up as collateral, the finance company (bank/credit union) will take the title and put their lien on it. That way you can't sell or anything until the bank is paid in full. On the title you will have the vin number, make, model, owner name, mileage, and any lien holder information. Once the loan is paid in full, the title is release (which means on the title there is a spot for the financial institution to sign).
"Lenders interest" means lenders lien.
Discussion Question Three - Done
Recently Congress considered changes to the bankruptcy laws that would have made discharging credit card debt even more difficult. But many people fall into debt for the very reason that credit card issuers give them credit cards that they are unable to use responsibly. Often the debtor received the credit cards unsolicited.
If you could propose changes to the bankruptcy laws dealing with credit card debt, what would they be? Please defend your answer.
Per my findings below, I think a house should be exempt from be seized if you can not make the repayments when using chapter 13. I do not see where in this statement it protects your assets if you fall behind on your re-payments as mentioned.
Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows
you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.
Most lawyers advise their clients not to reaffirm any debts unless they are sure they can afford to repay them since reaffirming a debt allows the creditor to pursue you legally if you default on the debt later
If I could propose changes, I would propose the law to put in definite time limits to when credit cards can be used before bankruptcy is filed. Now, it is advised to not use credit cards for 3 months before a bankruptcy is filed or there will be a presumption of fraud. Sometimes, however, people start bankruptcy proceedings more than 3 months before actually filing and the law is unclear as to what will happen if a credit card is used in the interim time before the 3 month tool. In addition, there has to be a better way to make sure that every credit card is accounted for on a bankruptcy petition. Credit reports often omit bills and some bankruptcy filers are left with debt even after they file bankruptcy.
Reaffirmations are a double edged sword. In the first place, it is very hard for an attorney to advise a client who is declaring that he has no money, thus declaring bankruptcy, to reaffirm on something that he knows is out of the person's budget. Thus, it is hard for an attorney to vouch that the person will be able to afford such a luxury to reaffirm upon. Nevertheless, if a person does not reaffirm an asset, if the person keeps paying monthly payment it is unlikely that the asset will be taken away. However, some companies (Ford) will take away the vehicle or asset if a reaffirmation agreement is not signed so clients have to plan accordingly and make sure they are not stuck without a vehicle or a vehicle that they cannot afford.
If a person stops paying on his house or vehicle and the items are reaffirmed, they are obligated to pay. If they miss payments, not only with the item be taken away but they will owe whatever is the remainder on the loan after the asset is sold. If the items are not reaffirmed, they individual will not owe anything if they miss payments, but they will lose the asset.
Case for Analysis – Week Three
Davenport v. Chrysler Credit Corporation
818 S.W.2d 23 (1991)
Court of Appeals of Tennessee
Larry and Debbie Davenport purchased a new 1987 Chrysler LeBaron from Gary Mathews Motors on October 28, 1987. They obtained financing through Chrysler Credit
Corporation (Chrysler Credit) and signed a retail installment contract requiring them to
make the first of 60 monthly payments on or before December 8, 1987.
The automobile developed mechanical problems before the Davenports could
drive it off the dealer’s lot. Even before their first payment was due, the Davenports had
returned the automobile to the dealer seven times for repair. They were extremely
dissatisfied and, after consulting a lawyer, decided to withhold their monthly payments
until the matter was resolved.
Chrysler Credit sent the Davenports a standard delinquency notice when their first
payment was ten days late. The Davenports did not respond to the notice, and on
December 23, 1987, the Chrysler Credit telephoned the Davenports to request payment.
Mrs. Davenport recounted the problems with the automobile and told Chrysler Credit that
she would consult her lawyer and “would let them know about the payment.” After
consulting the dealer, Chrysler Credit informed Mrs. Davenport that it would repossess
the automobile if she did not make the payment.
Employees of American Lender Service arrived at the Davenports’ home on the evening of January 14, 1988. They informed the Davenports that they were “two
payments in default” and requested the automobile. The Davenports insisted that they
were not in default and, after a telephone call to their lawyer, refused to turn over the
automobile until Chrysler Credit obtained the “proper paperwork.” The American
Lender Service employees left without the car.
Before leaving for work the next morning, Mr. Davenport parked the automobile
in their enclosed garage and chained its rear end to a post using a logging chain and two
padlocks. He also closed the canvas flaps covering the entrance to the garage and
secured the flaps with cinder blocks. When the Davenports returned from work, they
discovered that someone had entered the garage, cut one of the padlocks, and removed
American Lender Service informed Chrysler Credit on January 18, 1988, that it
had repossessed the automobile. On the same day, Chrysler Credit notified the
Davenports that they could redeem the car before it was offered for sale. The Davenports
never responded to the notice. Instead of selling the automobile immediately, Chrysler
Credit held it for more than a year because of the Davenports’ allegations that the
automobile was defective. In July, 1989, Chrysler Credit informed the Davenports that
the automobile had been sold and requested payment of the $6,774.00 deficiency. The proof supports the trial court’s conclusion that Chrysler Credit had a legal right to initiate repossession procedures.
The Davenports’ dissatisfaction with their automobile did not provide them with a
basis to unilaterally refuse to honor their payment obligations in the retail installment contract. At the time the repossession took place, the Davenports had not requested rescission of the contract, attempted to revoke their acceptance of the automobile, pursued their remedies under the “lemon law,” or taken any other formal steps to resolve their dispute with the dealer concerning the automobile. The Davenports’ conduct gave Chrysler Credit an adequate basis to consider the loan to be in default and to decide to protect is collateral by repossessing the automobile.
The Tennessee General Assembly preserved the secured parties’ self-help
remedies when it enacted the Uniform Commercial Code in 1963. It also preserved the requirement that repossessions must be accomplished without a breach of the peace. The term “breach of the peace” is a generic term that includes all violations or potential violations of the public peace and order. We can find no support for limiting “breach of the peace” to criminal context.
Secured parties may repossess their collateral at a reasonable time and in a reasonable manner. Self-help procedures such as repossession are the product of a careful balancing of the interest of secured parties and debtors. Chrysler Credit and American Lender Service do not dispute that they obtained the automobile by entering a closed garage and by cutting a lock on a chain that would have prevented them from removing the automobile. The Davenports are only entitled to recover their damages stemming directly from the manner in which American Lender Service repossessed their automobile.
We reverse the trail court’s judgment dismissing the Davenports’ complaint.