consumer - repossesssion - voluntary v. involuntary

Cosgrove v. CItizens Automobile Finance, Inc. - ED Pa. - August 26, 2010

http://www.paed.uscourts.gov/documents/opinions/10D0886P.pdf

Plaintiff brought claims against Defendant for defective notice of repossession of cars, under the UCC and the Pa. Motor Vehicle Sales Finance Act (MVSFA) Defendant moved for judgment on the pleadings, which the court denied.

The key issue involved the fact that plaintiff voluntarily surrended the vehicles, rather than suffer involuntary repossessions. Defendant claimed that this voluntariness of plaintiff's action took him out of the coverage and protection of the MVSFA. The court rejected this argument:

The Court is not persuaded that the Legislature in section 623(D) [of the MVSFA] intended to distinguish between debtors who surrender their cars and those who lose their cars to involuntary repossession. Voluntary surrender of vehicles with defaulted loans is to be encouraged, as it reduces potential conflicts between debtors and creditors. . . . The Pennsylvania Legislature surely did not mean to punish debtors who choose to cooperate with lenders by depriving them of their right to receive notice of their contractual reinstatement rights, nor insist that debtors fight their lenders tooth and nail in order to receive protection under section 623(D). Many reasonable debtors, when informed by a secured creditor that they are past due on their repayment obligation and that the creditor is planning to seize their car, will not wait for the embarrassment of a “repo man” showing up at their door but will instead return the vehicle. This does not mean that these debtors are ceding all rights to the collateral or that they could not benefit from notice of their contractual right to reinstatement. A person who relinquishes his car in the face of pressure from creditors and a person whose car was seized from him both have the same “forlorn hope that if he is notified, [he] will either acquire enough money to redeem the collateral or send his friends to bid for it.” . . . .Because voluntary surrender is preferred under the law, the Court cannot conclude that the Pennsylvania Legislature intended to deny debtors who surrender their collateral the same rights conferred upon debtors whose property is repossessed. Addressing an analogous issue, courts have concluded that a creditor is not relieved of the obligation of notice of disposition of collateral simply because a debtor voluntarily surrenders his or her property.