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Lenders Tracking and Disabling Vehicles Before Default, Repossession

Late last year I wrote about how delinquencies in the subprime auto loan market are rising because auto finance companies are targeting debtors with poorer credit. As borrowers fall behind on their payments, the number of repossessions grows. In the past, borrowers could rely on a few strategies to prevent a repossession of their vehicles. One notable idea is to keep the vehicle locked away where the repo agents couldn’t get at it, such as a garage. Strategies like that might not work so well anymore, going by a New York Times article, because for the last few years auto sales, finance companies, and even credit unions have been using GPS trackers and disabling technologies to make it easier for repo agents claim the vehicles.

The primary concern among consumer advocates is privacy. GPS devices enables lenders to monitor where borrowers drive their vehicles, including when they leave town. The lenders, for their part, claim the devices make it easier for them to lend to low-income borrowers and that they only activate the devices when borrowers default and they wish to repossess the vehicles. Some borrowers the Times interviewed said that they received no disclosures telling them that they might be monitored. Consequently, one lender disclosed that the Federal Trade Commission is investigating whether auto lenders are breaching consumer privacy laws.

Once a borrower defaults, the lenders then activate “GPS starter interrupter devices,” which can disable the borrower’s vehicle remotely. Even if this technology were used scrupulously, such as with clear warnings to borrowers before they purchased the vehicles, the possibility of abuse is significant. One borrower testified that her car was deactivated when she needed to bring her feverish child to a hospital. Another said her vehicle was disabled while it was operating on a freeway. Debtors can be stranded or stuck in distant or dangerous neighborhoods. The article doesn’t even discuss the ease with which hackers can attack these devices for their own purposes.

The New York Times article is here.

It’s wholly possible that GPS starter interrupter devices won’t run afoul of privacy laws and become a normal feature in cars. Some consumers might even want them to prevent thefts. However, the devices give lenders a clear advantage over borrowers. As a result, if you’re having trouble with your auto loan payments then you should talk to an experienced New York bankruptcy lawyer as soon as possible. Privacy laws may not protect drivers from new technologies, but the automatic stay still does.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

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