CU Resources Spotlight
Repossession: The Risks of Hiring a Non-Professional
By: Brian Dunleavy, TCAR,
Vice President/Manager Corporate Administration
Any credit union, regardless of size, knows that once a secured loan goes in default that they can recover their collateral through "self-help repossession". The Uniform Commercial Code (UCC) allows the creditor to utilize the remedy of repossession as long as it can be accomplished without "breach of peace".
The task to accomplish repossession without breach of peace is put squarely in the hands of the hired repossession firm, thus the selection of a professional repossession company should be made with great scrutiny by any credit union.
Repossession companies are not all created equal. Anyone with a tow truck can call himself a repo man. However, is what they are doing legal, or more importantly, putting you at risk? That’s the risk all credit unions should realize.
Professional repossession companies should all be able to provide you with the following:
Your agency’s insurance program should provide repossession specific protection.
One million dollars in general liability insurance.
One million dollars in auto liability insurance
Garage keepers insurance (direct primary basis).
Wrongful repossession coverage.
Personal property coverage.
One million dollars in bonding
New York State private investigators license. New York courts have determined that although the act of repossession does not require a private investigator license, any type of investigation does. Almost every repossession case requires some type of investigation.
Your agency’s storage facilities should be highly secure with chain link fences and lighting. Request pictures.
Your agency should be fiscally strong; annually review their financial reports.
Trained and certified staff.
Your agency should provide documentation such as client references that evidence the length of time they’ve been in the repossession business. Three years should be your minimum requirement. Five years is preferred.
Your agency’s owners should provide documents which reflect their personal experience, especially if they have been certified as a Certified Recovery Specialist.
Membership in at least one of the 3 major trade organizations; ARA (American Recovery Association), NFA (National Finance Adjusters), or TFA (Time Finance Adjusters). All three have a code of ethics, client bonding protection, and membership requirements.
Lastly, they should be able to provide services such as assistance with asset remarketing in a "reasonable commercial manner". And professional advice.
We have all heard the stories of the lender being held responsible for the actions of the hired contractor. Damage claims and potential lawsuits can be costly. A professional repossession company can reduce your risks and work as a partner with your collection staff.
More information on the company and their
services.
March, 2008
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