Collateral Recovery Process: Recover While Staying Compliant

Weltman’s collateral recovery team recently attended the Cherokee Media Group’s Used Car Week to present The 3 R’s: Recovery, Replevins, & Reputation. This discussion was presented by shareholder Amy Clum Holbrook and attorney Stefanie Kempfer Collier and moderated by national director of collections Dave Tommer. As a follow-up to this informative presentation, we want to share the top takeaways to assist creditors and their industries in the recovery process.

Repossession Letters and Compliance

State laws govern repossession letters, and the purpose is to give consumers information regarding their rights under applicable state law. 

Before starting the repossession process, it is essential to consider the following:
  • Is the car worth repossessing? 
  • Is the consumer in default?
  • Is the consumer in the military?
  • Which state’s law applies to the consumer? 
If you decide to move forward with the repossession process, the next step would be planning and implementing the applicable state repossession letter and procedure into your business practice.

Examples of types of repossession letters include:
  1. Notice of Strict Compliance – Used when you have accepted late or partial payments
  2. Right to Cure – Gives opportunity to cure the unaccelerated balance
  3. Notice of Sale Letter – Includes applicable sale information and rights to redeem and/or reinstate
  4. Post-Sale Letter – Sent to the consumer following the disposition of collateral
State law will dictate what letters you must send and when you must send them. Repossession letter requirements may also vary based on the type of loan agreement. Reviewing letters for compliance with state law and accurate information is important. Below are some of the most common errors found within repossession letters:
  • Private vs. public sale
  • Address issues
  • Untimely letters
  • Omission of guarantors or co-buyers
  • Incomplete location
  • Incorrect itemization

“It’s important as a creditor to send the correct state-specific repossession letter based upon where your consumer or collateral is located and to have your letters reviewed to make sure they are following current state law. If you have accepted late or partial payments in the past from your consumer, it is recommended to use a notice of strict compliance. Stay aware and check that your repossession agents are following the October 2020 CFPB Consent Order regarding personal property and not charging consumers a fee upfront to return personal items.”

-Attorney Stefanie Kempfer Collier

Recovering with Replevins

A replevin is a judicial process available to creditors to recover possession of personal property, governed by state statutes (such as O.R.C 2737 in Ohio).

“Why file a replevin? Time is money. Every day that you don’t have your collateral, it goes down in value. When a creditor breaches the peace, they are liable to the debtor for damages under Article 9 of the Uniform Commercial Code (UCC). My top tip for handling the replevin process is to remember that a replevin action can include the person or entity in possession of your collateral, even when they are not the borrower.“

-Shareholder Amy Clum Holbrook

Stay Aware of the Consumer Financial Protection Bureau (CFPB)’s New Regulation F

Regulation F recently went into effect on November 30, 2021, and has implications for any creditor who engages a third-party collection agency or repossession company. Due to this implementation, work standards and expectations that creditors have of third-party collectors and vendors may need to be adapted to remain compliant. For more information on Regulation F, read our recent blog, A Step-By-Step Guide of the CFPB's New Rule: Regulation F Simplified.

Our collateral recovery team has extensive experience in repossessions, replevins, and recovery. If you have questions, please contact Amy, Stefanie, and/or Dave at any time. For more comprehensive information and insights, watch our Ask a Pro: Recovering with Replevins webinar.

This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.

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Amy Clum Holbrook


David B. Tommer

National Director of Collections

Stefanie Kempfer Collier


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