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Was this an illegal car repossession in Michigan

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We were behind a couple months in making a car payment. We did stay in contact with the credit union that financed the car. They accepted late payments, no problem. One night I heard something outside and looked out the window. Our car was being repossessed. My husband went out there very calmly and asked if he could remove a few things from inside the car. No problem. He gave them the key to the car and came back in the house. We thought we would hear from them about getting up to date on the past due amount, we never did until 2 weeks later. We got a letter in the mail stating they had sold the car in auction for $3400. The loan was for almost $8,000. We had the used car for exactly one year and put money into it, fixing things. 2 questions? weren't they supposed to inform us of a potential sale of the vehicle and given us a chance to pay the full amount past due? AND we never got our license plate back, it had a brand new tab on the license plate. They are crazy if they think we are going to pay $3400. That is not a reasonable sale after owning the used vehicle for one year and putting money into fixing things.

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We were behind a couple months in making a car payment. We did stay in contact with the credit union that financed the car.

Staying in contact is meaningless. Paying on time is what counts.

They accepted late payments, no problem.

Yes, problem.

If you were in default of any payment by even one day past the due date (or grace period date if there was one) the lender has the right of repo regardless of how many late payments were accepted.

We thought we would hear from them about getting up to date on the past due amount, we never did until 2 weeks later. We got a letter in the mail stating they had sold the car in auction for $3400. The loan was for almost $8,000. We had the used car for exactly one year and put money into it, fixing things. 2 questions? weren't they supposed to inform us of a potential sale of the vehicle and given us a chance to pay the full amount past due?

Yes, I think so. But your statutes are a bit confusing as to how that is supposed to work.

Here's a link to the statute that addresses default and enforcement of security interest. Start at 440.9610.

http://law.justia.com/codes/michigan/2011/chapter440/act174of1962/174-1962-9/174-1962-9-6/174-1962-9-6-1-/

AND we never got our license plate back, it had a brand new tab on the license plate.

Whether you can do anything about that depends on whether MI requires the owner to retain the plate or whether the plate goes with the car. You can call your DMV and ask about that. If the plate goes with the car then losing a year's worth of registration cost is just one of the unpleasant consequences of defaulting on the loan.

They are crazy if they think we are going to pay $3400. That is not a reasonable sale after owning the used vehicle for one year and putting money into fixing things.

Sure, it's reasonable. You defaulted and the car got repossessed. Losing the money you put into fixing things is just another consequence of default.

If you think you've been wronged by the lender or repo company, you are free to file a lawsuit.

Otherwise you can count on being sent to collections or eventually sued for the money and then it's likely going to cost you a lot more than the $3400 because you'll end up paying their attorney fees.

You might consider bankruptcy if you are eligible and have other debts that you can't handle.

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i went to the link you suggested. It does state that a letter has to be sent to inform you of where the auction will be and that you can attend in Michigan. Mi Comp L 440.9614

Then you might have some legal recourse against the lender.

However, you wrote earlier:

weren't they supposed to inform us of a potential sale of the vehicle and given us a chance to pay the full amount past due?

If, by that, you meant the full amount of the past due monthly payment, no, that would not have been the option. Once you default on the loan the entire balance becomes immediately due and payable.

If you were to be successful in suing the lender, you would have to show that you had the full amount of the loan balance in cash to redeem the car with.

If you didn't have the full amount of the balance available during the required notice period then lack of notice might be seen by a court as harmless error since you wouldn't have been capable of getting the car back even if you had been notified.

You might want to consult an attorney about that.

I have also read that it is a common practice for a car to be sold at auction for the very lowest price and it is not reasonable because they just wanted to sell the car as fast as possible. Not trying to get a fair price because they are just in a rush to auction it off.

Sorry, but it IS reasonable and legal to sell it at auction as quickly as possible for the highest bid which is likely a low wholesale price because it's mostly car dealers that go to those auctions.

Again, had you gone to the auction you would have had to outbid everybody else and pay cash for the car. That money would go to the lender after expenses and that money would not cover the loan balance so you would still owe the remaining balance. Bidding on the car is not the same as redeeming the car for the full amount of the balance.

i have also found several links online that suggest in Michigan, the plates are not taken.....or not supposed to be taken

Unfortunately, once a car is repossessed, the owner loses control by default. Your loan contract (which I suggest you study) probably gives the lender and its agents (like the repo company) immunity for a lot of things as a result of your default.

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