Repossessing Collateral from defaulted loan

[wfa55555`]

What is the name of your state? Massachusetts

I loaned a friend (ex-friend now) money to purchase a car. Actually, she had already owed me money. However, this time I had her sign secure note for total amount she would owe me car + previous amount and note listed the car as collateral securing the loan. The total amount of the note was $9500 and car amount was $5000. She defaulted on first payment and failed to cure within 21 days from notice of default. The note had an acceleration clause making whole amount due upon failure to cure. I have also sent notice that I'm opting to accelerate the note due to failure to cure. Now she promised she would list me as lien holder on the Title, but apparently did not. So my questions are as follows:

• Can I still re-possess car at any time or do I need to go to court first since I'm not on title?
• If I have to go to court, which is the recommended court, small claims or general? I think limit for small claims in MA is $7500, but may be willing to forfeit some money to get quick resolution as person has type of job that doesn't show a lot of the income that they make so could be hard to collect. Though does small claims have the teeth to enforce re-possession?
• If I can re-possess immediately, is contract enough paperwork so I don't get arrested for stealing car? Also, is there any way to force person to give me keys/title? If not, how do I go about getting those?
• Any other info that might be helpful to resolving this situation?

 

[PayrollHRGuy]

Who created the "Secure Note" that she signed?

Did you place a lien on the car?

 

[wfa55555`]

Who created the "Secure Note" that she signed?

Did you place a lien on the car?

I downloaded template, filled in all info, and we both signed and initial all pages in blue ink. Car with VIN are listed in listed in collateral section.
Unfortunately I could not take off day she was buying car so I trusted her to put my name as lien holder on RMV-1 form which she promised she would do, but apparently didn’t.

 

[adjusterjack]

Can I still re-possess car at any time

No.

do I need to go to court first since I'm not on title?

Yes, you would need to sue her for the money. But even if you were successful and got a judgment, that still wouldn't get you the car. In Massachusetts a car is exempt from judgment up to a value (or equity) of $7500.

See Section 16 at the statute:

https://malegislature.gov/Laws/GeneralLaws/PartIII/TitleII/Chapter235/Section34
She paid $5000 for the car so you are out of luck there as your contract apparently didn't have a right of repossession written into it nor did you get your lien listed on her title.

If I have to go to court, which is the recommended court, small claims or general? I think limit for small claims in MA is $7500, but may be willing to forfeit some money to get quick resolution as person has type of job that doesn't show a lot of the income that they make so could be hard to collect. Though does small claims have the teeth to enforce re-possession?

Regular court is a lot more comprehensive than small claims and is quite rigorous in its rules. You'll probably have to hire a lawyer if you expect to be successful in regular court. Small claims is a better idea even if you have to waive some of the debt.

If I can re-possess immediately, is contract enough paperwork so I don't get arrested for stealing car?

As I have already written, you've blown any chance at repossession.

Also, is there any way to force person to give me keys/title?

No, not without a judgment and, even then, not in your case since a $5000 car is exempt from judgment.

If not, how do I go about getting those?

I think I have made it clear enough that you don't.

Any other info that might be helpful to resolving this situation?

If you sue and get a judgment you can garnish her pay or levy her bank account.

I trusted her to put my name as lien holder on RMV-1 form which she promised she would do, but apparently didn’t.

Yeah, a lot of the posts on this site start with "I trusted."

 

[wfa55555`]

Adjuster Jack - Thank you for prompt response. Seems like I'm screwed, but just curious, even though car was specifically listed as collateral securing the Note, because the value of car is too low I can't repossess? I know loan companies repossess cars all the time, are you saying they can only repossess expensive cars or is it just because I didn't get on the title? If latter, what happens if some puts up something else as collateral that doesn't have title. Below is language of Acceleration clause so the line "...in addition to any other rights or remedies that Lender may have under the security instrument..." does give right to repossess. What other rights would you have regarding security instrument? Also, what language would have had to be written into contract to allow repossession? All info, even that which I don't like, is very much appreciated.

ACCELERATION: If the Borrower is in default under this Note or is in default under the security instrument securing repayment of this Note, and such default is not cured within _21___ days after written notice of such default, then Lender may, at its option, declare all outstanding sums owed on this Note to be immediately due and payable, in addition to any other rights or remedies that Lender may have under the security instrument or state and federal law.

 

[adjusterjack]

even though car was specifically listed as collateral securing the Note, because the value of car is too low I can't repossess?

It's not the value of the car that I am concerned with. It's whether or not your contract gives you the right of repossession. If it turns out that you cannot repossess and can only sue for money, the car is exempt from judgment up to $7500. If the car was worth $8000 you could attach it, sell it, give the owner his $7500 and keep the $500 toward the debt. Hardly worth doing that, and not worth doing it at all if the value is below $7500.

I haven't read your loan agreement so I don't know if your agreement gives you the right of repossession. An acceleration clause is not a right of repossession. I could be wrong but I think that your agreement must specify a right of repossession. You would be wise to have an attorney review your agreement to find that out.

Meantime, read the laws regarding vehicle repossession. Just getting the car isn't the end of it. There are a lot of hoops to jump through.

https://www.mass.gov/info-details/massachusetts-law-about-repossession#massachusetts-laws-

I didn't get on the title

Well, that, of course, is the big problem. The owner can sell the car and than all you'll have left is a lawsuit for money.