Technology is now making it harder for debtors to keep their hands on their vehicles, according to recent a Washington Post article on auto repossessions. The topic is similar to a post I wrote last year about lenders tracking and disabling vehicles, even though their owners hadn’t defaulted on their loans. In that article, the lenders were tracking all their debtors’ vehicles in a centralized database, but now repossession companies are taking a decentralized approach: detecting all the potential repossession targets in a region. It’s making repossession much more profitable, suggesting that debtors finding difficulty paying their auto loans should consider bankruptcy much earlier than before.
Here’s how it works. One car (the “spotter”) is equipped with multiple cameras pointing in different directions and a computer inside to process them. The spotter drives around wherever the repossession company suspects cars with late payments may be, and as it does so it captures license plates of nearby vehicles. The computer reads the information and whenever a vehicle subject to repossession is detected, it alerts the driver, who then calls for a tow truck.
The reason this particular technology is so effective is that it reduces the costs for the “repo men.” Instead of going to a specific location each time a loan goes into default, such as a last-known address, the company casts a net to tow the vehicles it identifies. In particular, the technology makes it much easier to find vehicles that aren’t at debtors’ stated addresses. The company the article showcases essentially tracks where all vehicles are throughout the day and establishes their owners’ driving patterns. Shopping malls and discount stores are notably common locations for finding vehicles with delinquent loans, and one apartment building in particular provides a regular supply of hits for the driver the Post interviewed. (Perhaps the landlord was more generous to low-credit tenants than those owning similar complexes.)
The reason the repo industry has done so well is the high number of subprime auto loans that have gone into delinquency or default. According to the Federal Reserve Bank of New York, overall auto delinquencies remain flat, but they’re rising in the subprime segment of the market.
The Washington Post article is here.
Debtors don’t have many options for keeping their cars safe from repossession. The best option is locking it in a garage on private property (ideally the debtor’s), so that repossession would require criminal trespassing. Aside from that, bankruptcy offers debtors a few options for keeping their cars out of repo men’s hands. Chapter 7 debtors can either redeem their vehicles from the lender by paying them their vehicles’ market values, and chapter 13 debtors can reduce their auto loan payments to their vehicles’ market values (a “cram down”), which can also lower interest rates.
If you’re at risk of falling behind on your auto-loan payments, then the repo men probably know where you or your car always are, and it’s only a matter of time until they snatch it. Rather than do nothing, talk to an experienced New York bankruptcy lawyer to assess your options.
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.
