USAGAPP.com Equipment Repossession Company
Banks, equipment leasing companies and other extenders of credit that take personal property as security for indebtedness often engage repossession companies to repossess, repair, store, and sell such repossessed property for them. While there is no doubt that such repossession companies provide a useful service to the financial services industry, anyone thinking of engaging one of these repossession companies needs to fully vet the equipment repossession company and make sure it is not creating difficult problems for the unwary creditor in the course of providing its repossession services
. When engaging a repossession company, look for principals who are experienced, competent, engaging, who evidence good leadership skills and are interested in the creditor’s issues.
Other problems commonly include the following:
Failure to send Notification of Disposition of Collateral.
UCC §§9611, 9613, require that in non-consumer goods transactions before the repossessed equipment or collateral can be sold a properly worded Notification of Disposition of Collateral must be sent to the proper persons. Note that this section specifies who must receive this notice and that those entitled to notice are not necessarily limited to the equipment lessee, note maker or other principal, but include guarantors and possibly many others. In some states, failure to send the Notification is the end of the line in that the creditor will be denied a deficiency judgment on that basis alone.
Failure to conduct a commercially reasonable sale.
While a full discussion of what constitutes a commercially reasonable sale is beyond the scope of this article, any repossession company endeavoring to sell repossessed collateral must have the personnel, knowledge base, record-keeping capacity and business practices necessary to selling equipment whether by private or public sale. Such a company must know the differences between the two types of sales and when to call for an auctioneer or attorney.
Failure to keep proper records.
What happened when the repossessors went to take possession of the collateral? Who said what to whom? After obtaining possession, what steps were taken to generate interest in the repossessed equipment, especially in the case of private sales? What companies were contacted? Why those particular companies? Are there originals or copies of all pertinent letters, media ads, emails and faxes in the file? Are there phone logs that can be admitted into evidence to prove that calls were made to likely potential buyers of the repossessed equipment to show that the sale was commercially reasonable? Are there original written bids in the file that can be received into evidence? Were repairs made to the equipment? If so, why? How much did they cost and were such costs necessary and reasonable? Were such repairs specifically authorized by the lender? Who handled the file? Are there names or initials by each record entry so that the repossession company’s witness at trial can state who did what? Is there a proper and understandable accounting of all costs and disbursements with itemization and a bottom-line figure?
Failure to have personnel on staff who can qualify as custodians of records at trial.
In order to get the company’s repossession sale-related records into evidence at trial, the repossession company must have employees who can physically appear at trial, qualify the company’s business records so that they are admitted into evidence and explain what happened in the course of the sale efforts, the results of the sale efforts together with any problems or anomalies. Witnesses having personal knowledge of the sale process are even better witnesses than mere custodians of records because they can answer questions on cross-examination and explain adverse evidence on redirect examination by the creditor’s attorney. For example, they could explain why a seemingly low sales price was obtained and rebut the debtor’s contention that the equipment was just “dumped” for pennies. Sending to trial an 18 year old recent hire barely out of high school and expecting such a person to testify convincingly during the stress and rigors of a trial is unrealistic and a recipe for failure and any company that would do so is more interested in saving money than serving the lender’s needs.
Failure to maintain a reliable employee pool.
One of the biggest problems I have seen is constant turnover at repossession companies. Frequent turnover and the lack of continuity that goes along with it is almost guaranteed to result in confusion, uncertainty, lost equipment, poor or non-existent documentation and records and inexplicable gaps in time during the life of the repossessed equipment when nothing was apparently happening at a time when sales efforts should have been happening. Admittedly, the owners of such companies have only limited control over the comings and goings of their employee staff, but it is suggested that serious attention to proper employee compensation, morale and working conditions be paid so as to provide the proper incentives conducive to keeping a long-term work force in place. Go To www.USAGAPP.com today find out more.
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