Louisiana Repossession Law Firm
Louisiana law affords certain protections to secured creditors. When a lender provides financing for the purchase of a vehicle, the vehicle itself is always listed as security on the loan. This differs from personal loans in which no collateral is offered. When the promissory note and security agreement properly identifies the vehicle, boat, recreational vehicle, commercial equipment, etc. as security and the title is recorded with the proper agency, then the secured creditor holds a lien on the property.
If a debtor defaults on the loan, the secured creditor has certain rights to repossess the collateral. Just as in bankruptcy, the rights of a secured creditor certainly outweigh those of an unsecured creditor. In the world of auto loans as well as other movable property, creditors have several options, depending on the circumstances, to repossess the vehicles that secure their defaulted loans. We represent auto lenders statewide and advise our clients regarding their best options.
When people think of the classic repossession in which the sheriff seizes a vehicle and auctions it off at the courthouse, they are likely thinking of a judicial proceeding called executory process. Our office routinely files these actions on behalf of our clients. While “self-help” is often available to them, they choose to hire us for a number of reasons. Some choose not to deal with the stringent requirements set forth on creditors under the self-help laws. Others may not know the whereabouts of the debtor or the collateral and trust our ability to track them down. Often times self-help cannot be achieved without breaching the peace. Whatever the reason, our office is happy to help.
Executory process is a judicial repossession designed to give a creditor holding a lien a way to collect its debt in minimal time. Executory process is governed by La. Code Civ. Proc. art. 2631 et. seq. Executory process is an ex parte proceeding. After filing the clerk will issue a demand for payment, but this demand is often waived in modern promissory notes. If waived, the clerk will immediately issue a “writ of seizure and sale” and the sheriff will then serve notice of the writ on the debtor.
Certain requirements must be met for executory process to be available. First, the promissory note must contain a “confession of judgment” which dispenses with the need for a trial because the defendant already recognizes the existence of the debt and confesses judgment against him or her if the debt is not paid. For notes secured by movable property such as automobiles the security agreement does not need to be in authentic form. However, either the original note or a certified copy must be filed into the record.
After the writ is issued and property seized, the sheriff must advertise the sale of a movable such as a vehicle at least once in the newspaper. In general, the collateral must also be appraised prior to the sale, but the requirement for appraisal can be waived and often is. However, it is prudent to proceed with appraisal anyway to preserve the creditor’s rights to pursue a deficiency judgment. Further, when collateral is seized and sold with appraisal, the sale at auction must be for at least two-thirds of the appraised value or the sale will be cancelled and readvertised. Creditors usually start the bidding at this threshold to assure the sale goes through.
Our creditors’ rights attorneys are highly experienced at repossessing automobiles via executory process and have filed hundreds of these actions over the years for various auto lenders.
Seizing a vehicle or other movable property via ordinary process differs from executory process in that the creditor must attain a money judgment first. It is also different in that a writ of seizure and sale under executory process attaches only to the property in question, whereas a “writ of fieri facias” under ordinary process attaches to general property of the debtor to satisfy the money judgment, subject to the exemptions from seizure outlined in La. R.S. 13:3881.
It isn’t a repossession per se, but the process is somewhat similar after the money judgment is obtained and suspensive appeal delays have tolled. We commonly execute on money judgments with writs of fieri facias, but it can also be a viable option to pursue collateral on a loan if the promissory note lacks a confession of judgment. The steps after the issuance of the writ are similar to executory process with some subtle differences. The procedure is governed by La. Code Civ. Proc. art. 2291 et. seq.
The Louisiana Additional Default Remedies Act provides the “self-help” laws permitting creditors to repossess motor vehicles and motorcycles directly. This is a form of non-judicial repossession that creditors can do themselves. Many of our clients do this on a regular basis prior to referring the files to us to pursue a deficiency judgment. It can certainly save a creditor some court and legal fees, but certain steps must be carefully followed and sometimes it just isn’t available as an option.
Self-help allows a secured creditor to take possession of vehicles without judicial process. First, the promissory note that grants the security interest in the vehicle must contain the clause that “Louisiana law permits repossession of motor vehicles without judicial process.” Second, the debtor must be in default, meaning that they have missed two consecutive monthly payments or have not paid in at least 60 days for notes with a weekly or bi-weekly payment schedule.
Next, the creditor must send a “Notice of Intent” to all debtors at their last known address that contains the phrase, “Louisiana law permits repossession of motor vehicles without further notice or judicial process.” After the notice is sent, the creditor may take possession. The person who physically takes possession of the motor vehicle must be a licensed repossession agent. If a tow truck is used, the owner or operator, shall possess a common carrier certificate issued by the Louisiana Public Service Commission.
The physical act of repossessing a motor vehicle must be done without “breach of peace.” At a minimum, this means the agent cannot enter a locked dwelling such as a garage or gated yard; the agent cannot force or threaten the debtor; and any oral objection by the debtor prior to possession must be met with the agent leaving the vehicle behind. This is what most often makes self-help unavailable to our clients, necessitating executory process.
After possession is taken, the creditor has three days to file a “Notice of Repossession” with the recorder of mortgages in the parish where the vehicle was located and with the appropriate constable, marshal, or sheriff determined by the debtor’s last known address. It is highly recommended that the creditor then send a “Notice of Sale” to the debtor prior to the private sale or public auction.
This is followed by a “Notice of Disposal” after the sale which outlines the amount of the debt, the sale price, the costs of the sale or auction, and the resulting deficiency. These final two notices are necessary if the creditor wishes to pursue a deficiency judgment for any remaining balance due on the loan after being credited for the net sale proceeds.
Louisiana also allows a borrower to surrender their vehicle voluntarily. They can return it to the lender when they cannot meet the terms of their contract. To do this, they must first let the lender know that they can no longer make payments and want to give up their vehicle. The lender will then set up a location and time for them to turn in the car. This can be beneficial for both sides as a way to save costs, i.e., more of the sale price will be available to be applied to the loan balance.
A deficiency judgment will be available to the creditor if the debtor agrees. It is recommended that an “Affidavit of Voluntary Surrender” be executed by the debtor at the time of the surrender agreeing to the value to be assigned to the vehicle and agreeing to be responsible for any deficiency balance.
New Orleans Repossession Attorneys
Bowes, Petkovich & Palmer, LLC is a Gretna law firm that has served the New Orleans area since 1980. Our experienced creditors’ rights lawyers are well versed at handling repossessions throughout Louisiana and pursuing deficiency judgments. We take pride in offering an effective and efficient experience. Call us today for a free consultation and find out why so many of our clients come back to us.