Q: I have a car loan with a local bank and had to do a month’s deferral because I was out of work for a while. I called my local branch and spoke to their loan officer, who sent me the paperwork in the mail and told me everything would work out just fine. He said the month I couldn’t afford to pay would simply add on to the end of my loan and it wouldn’t be a missed payment. However, I’ve been getting nonstop collection phone calls from their collection department. I spoke with them and explained the situation to someone there and they told me “oh yes, now that you said you had a deferral I see that on our system”. They told me everything was fine. But today while I was at work they called again and a tow truck was seen on my street. If they tow my car wrongfully, can I hold the bank liable and sue?
A: You are likely in breach of your loan agreement if it is not paid and I am assuming under the same contract they are permitted to reclaim their vehicle. Now, the question is whether you can rely on their promise to extend or defer, or, is this just trickery being used to get their car back? Lenders are permitted to use some level of trickery in repossessing their collateral. It is not uncommon for the lender to invite you in to discuss your financial woes, while unbeknownst to you your car is being hooked and hoisted by a tow truck in the parking lot. What a lender cannot do is breach the public peace in the repossession process. For example, if your car is on a public street, it is fair game. However, they cannot go into your garage and take it. If you are serious about catching up with your payment, you might want to make the car unavailable until you are so caught up. If they do tow it, I don’t think you have a legitimate claim to sue them. If you cannot pay up, you may want to just turn the car in voluntarily to preserve your credit worthiness. Additionally, if they are calling you at work, they are in violation of the law.