The dealer that had their collateral dumped back on them, has the legal and contractual right to liquidate the collateral in a commercially reasonable manner (repo sale) and go after their customer by way of a law suit and judgment. This is not as complicated as it sounds. Quite frankly, the commercially reasonable sale part of the equation should already play a role in your repossession process, unless your customer negotiates voiding the contract and they sign the title back over to the dealership.
A legal repossession sale follows state law and federal regulations. Every state has a requirement to send a legal notice to the customer after repossession. This notice states that the vehicle will be sold at a public or private repo sale in 10, 15, 20, 21 or 30 days, depending on the state. After the repossession sale, the customer must receive an Explanation of Deficiency. A vehicle condition report is a powerful tool that is necessary to document the wear and tear on a vehicle at time of repossession. A solid vehicle condition report will support the values in the Explanation of Deficiency. In a few cases the dealer or lender can accept the vehicle back and forgive the debt. Consult your accountant or tax professional to see if this will require you to file a 1099c for each account forgiven.
Drop, Walk, & Drive is an epidemic that can be cured by lenders, BHPH dealers, and finance companies pursuing the bad debt that comes from the attitude that a customer can walk away from their obligation, simply because they feel like it. If customers on a larger scale are held accountable for the contracts they sign, more of them will take the ownership of the collateral serious. Maybe not at first, but it will eventually sink in that the oil needs to be changed occasionally if they are going to have to depend on the vehicle for transportation until they have enough equity to trade up.
The same can be said for the customer that quits paying and keeps driving the vehicle until the repo agent catches up with them. Whether they return the vehicle voluntarily or it is repossessed, they chose to ignore their obligation.
Defaulted accounts are revenue that never made it to the bank. Finding a third party relationship to partner with on a contingency fee basis will add to the bottom line and eventually create better customers for our industry. I know this first hand.
NoticeofIntent.com provides a web-based dealer portal that at first seems like a compliance tool. At second glance it is obvious that it was created to recover lost income. Our attorneys are ready on a contingency fee basis for your accounts to be submitted through the program. Most users experience “Free Money” within the first year! Free money is when money that has been written off and forgotten about is recovered.
Not all accounts will generate “Free Money” right away. Defaulted account recovery and collections is a tough industry. Judgments accumulate interest and over time can mature into a very high balance. These accounts are the ones that surprise you one day long after they were forgotten about. Default recovery is not a fit for every business model, but if you are looking a low cost, high yield revenue stream…create your account with NoticeOfIntent.com right now!