The Ugly Truth About Vehicle Repossession

Truth about vehicle repossessionI am discouraged by how often someone comes to my office asking me to help them solve a problem they are having with a bank or credit union regarding a voluntary repossession of a vehicle.  For some reason people believe that if they simply give a car back to the lender they are all done with it.

WRONG.

Here’s what actually happens. The lender is entitled to spend as much money as needed to sell the vehicle. So first, most banks send the car to a repair shop and fix any issues and then put it on their lot to sell it. Then if it doesn’t sell fast enough, the vehicle is taken to a “closed” dealer auction and sold for less than wholesale price. All the costs of repairs, auction commissions, hauling the vehicle to the auction and any other costs are tallied up and added to the amount you owe the bank.

At this point the bank, lender or credit union has a loss. Now you not only have to pay for the lender’s costs in recovering the vehicle, fixing the vehicle and selling the vehicle, you find that they sold your vehicle for sometimes thousands of dollars less then it was worth, and you have to make up the difference. Now you have no car and are still making payments. If you had sold the vehicle yourself you could have gotten much more for it than the wholesale auction your lender used. Unfortunately, the end result for a lot of folks is often bankruptcy.

If given a chance, before the return of the vehicle, I can occasionally work a “deal” with a lender to take back a vehicle and get them to agree to forego any deficiency. Deficiency is the legal term used for the amount you owe the bank because by returning the vehicle and letting them sell it for half price, you still owe on your original note.

Also, never trust a bank verbally telling you anything. And especially don’t trust them if they say you will owe nothing if you bring the car back to them.  If a lender’s statement is not in writing, it didn’t happen. This exact situation happened in my office today. The credit union actually encouraged the debtor to bring the car back and said, on the phone, he wouldn’t owe anything. Now that the car is sold and the bank wants over $8,000! And surprise, surprise, nobody at the bank remembers saying he wouldn’t owe anything if he returned the car.

If you are late on payments on your car, boat, motorcycle, whatever, NEVER voluntarily return it to the bank and wait to see what the damages are. Usually, the damages are stunning and most times, completely ridiculous. Speak with me first so we can review your options and negotiate with your lender. If we can’t come to an agreement with your bank, we can look at other options. Doing this could save you thousands of dollars when you need it most.

The Confusion about Carrying a Firearm

NRA Guide to State Firearm LawsMore and more people feel the need to arm themselves these days. I suppose with all the criminal activity reported on the news people are more fearful and want to defend themselves, and for good reason. The sad part of this is the confusion pertaining to firearm laws. People who think they are law abiding citizens find themselves in trouble and end up arrested when they had absolutely no criminal intent. Unfortunately, the same is true with many of the laws and regulations in our country. It is not possible to keep up with them all, not even for attorneys.

There is little doubt that the laws for owning, carrying and transporting firearms are confusing. There are a large number of Federal Statutes dealing with weapon ownership, and each State has its own laws. None of the laws are the same so it is nearly impossible to know what is legal anywhere you go. Seems unfair, but that’s the way it is.

Kansas has opened its laws by not requiring anyone to have a permit or license to carry a firearm.  This is true whether you are hiding a gun in your pocket (called concealed carry) or if you wear it out in the open like a cowboy in the old west (called open carry). There are still a number of unknowns even in Kansas with these very unrestricted carry laws.

For example, be very careful not to “brandish” a gun. Brandish is a non-legal term that means you are handling a gun in a way that someone near you thinks they are being threatened. You can’t point a gun at someone or point the gun and threaten to use it. Also, you can’t pull your coat aside to reveal your hidden pistol like you see in the movies. All of these acts can get you arrested for Assault with a Deadly Weapon.

Further, there is no direction legally on whether you can carry your concealed pistol into a business or public place that has a “no weapons” sign on the door. This is the sign you see with a gun in a red circle with a slash through it.  Remember, if you have a concealed carry permit you must abide with that sign as it is part of the concealed carry license requirements. No such requirement is made on someone without a concealed carry permit.

This may seem unfair, but in Kansas you can carry concealed with or without a permit. If you have a permit you definitely have to abide with the regulations of that permit which are more restrictive than carrying a concealed weapon without a permit. Be safe and don’t take your weapon into a building marked with the no weapons sign, and if you have a concealed carry permit, make sure you are familiar with the restrictions that come with that permit.

NRA Building Fairfax VAIn Kansas it is pretty safe to carry any weapon however you like.  Don’t assume that to be the case in any other state.  That gun in your car glove box can get you arrested in almost any other state in the Union. If you must transport a weapon outside Kansas, be certain to check the laws of the state you are traveling to before you go. This is a pretty easy search on the internet.  The NRA has an excellent summary of all state carry laws here. The site also includes links to other states that recognize your permit to carry.

Additionally, you can transport a firearm on the airlines if you comply with all the requirements of the state you are flying to and the requirements of the Transportation Security Administration (TSA).  You can see these regulations here.

It is also important to note that Kansas is experiencing some problems with the expungement statute.  Federal law allows someone that has been convicted of Domestic Violence, but had the conviction expunged, to purchase and own a firearm. Because of the way the Kansas Expungement law is written, Kansans that have ever been convicted of Domestic Violence can never own a firearm, even after the conviction is expunged. If you get charged with Domestic Violence, be aware that it will affect your gun ownership rights in Kansas forever.

Although Kansas is very lenient with concealed and open carry from a statutory standpoint, be very aware that local law enforcement is not at all comfortable with you being armed. Be it either open carry or concealed carry, when a “Barney Fife” discovers you are armed they will likely try to figure out a way that you are breaking the law and get your weapon from you.  The right to carry arms is still considered by law enforcement and statute a right to hunt and defend yourself.  Any action other than these two purposes will likely get you in trouble and you will be visiting me. So, be wise, be smart, and enjoy and use your firearm wisely.

What You Should Know About Debt Management Plans

In recent months I’ve had a few clients come to my office because of a failed Debt Management Plan (DMP) proposed by a credit counseling service. Basically, a DMP is what a debt Debt management plan or bankruptcyconsolidation provider will sell you if you respond to their TV or radio ad about how you can get out of debt without filing a bankruptcy. For anyone struggling with credit card debt, the offer of making one easy payment and getting creditors off your back can certainly be enticing.

So, what is a Debt Management Plan?

Usually a DMP is a simple agreement saying you will make a monthly payment to the debt consolidator for a 4 to 5 year period. In turn, the debt consolidator splits up your payment, first paying themselves and then your creditors. The DMP providers attract clients with plans that include reduced interest rates, fees and payments. Obviously, credit card companies are more than happy to work with DMP counselors knowing these plans insure many more years of payments on the exorbitant interest they have already charged.

So, do DMP’s work? I assume there are some successful completions of a DMP but as a bankruptcy attorney I see the failures. The sad thing about a DMP failure is the debtors have usually made dozens of payments and still find themselves in the same place as before with little to show for it. Most of the time this means they’ve spent a small fortune and have to file a bankruptcy anyway.

The problems with DMP’s are numerous. First off, the plans can’t deal with mortgages, car loans or student loans. The payment agreement is strict, and one missed payment will usually void the entire repayment plan. Even worse, your credit score will not start to rebound until after you have successfully completed the entire DMP. If you get sick, divorced, lose your job or even if your car breaks down you will very likely not be able to continue with the DMP as you are not allowed to miss a payment or get another loan. And remember, five years is a LONG time for your life to run perfectly without missing a payment.

And then there’s the reality that in many cases a DMP isn’t really a good deal when it comes to your pocketbook. A good debt consolidation example comes from Dave Ramsey on his website here:

Let’s say you have $30,000 in unsecured debt, including a two-year loan for $10,000 at 12%, and a four-year loan for $20,000 at 10%. Your monthly payment on the first loan is $517, and the payment on the second one is $583. That’s a total payment of $1,100 per month.

The debt consolidation company says they can lower your payment to $640 per month and your interest rate to 9% by negotiating with your creditors and rolling the loans together into one. Sounds great, doesn’t it? Who wouldn’t want to pay $460 less per month in payments?

But they don’t tell you that it will now take you six years to pay off the loan. This may not sound that bad until you realize how much more you will actually pay in additional payments. You will now pay $46,080 to pay off the new loan versus $40,392 for the original loans, even with the lower interest rate of 9%. This means you paid $5,688 more for the “lower payment.” Not such a good deal after all.

I agree. This is not a great deal for most folks struggling with debt.

On the other hand, a bankruptcy is often called a “fresh start.” It’s like ripping off the bandage quickly. Your pain is momentary as you unload most of your debt including any upside-down house or car payment. And although your credit score takes a hit when you file bankruptcy, you can immediately begin to rebuild your credit and get on with your life rather than wait the 4 or 5 years to complete a DMP.

For a few people debt consolidation and a Debt Management Plan are a good option. If that is your case we can point you to a non-profit debt consolidator that is actually able to protect your best interest rather than charge a fee for a service.  However, if the math shows that you cannot repay your debts, we can usually solve that problem and get you a fresh start. After all, this is what the bankruptcy laws are for.

Dean Ryan is an experienced Garden City Bankruptcy Attorney
for Southwestern KS. For a free bankruptcy consultation
call 620-275-9614 during normal business hours.