Abstract:
Each year courts decide countless cases involving vehicle repossessions. There are several reasons for this. Some have to do with bankruptcy laws with debtors claiming damages in their bankruptcy proceedings after having lost their vehicles following default. Some get litigated because the unlawful repo also supports claims for intentional torts such as conversion or trespass to chattels. And many cases find their way into federal courts because an unlawful repo is also a violation of the Fair Debt Collection Practices Act. Given all the litigation, it is not surprising that decisions are not always consistent. In this paper, we review some recent decisions that raised some interesting issues with this common situation in consumer secured transactions.
I. Overview of Breach of the Peace Doctrine.
A creditor repossessing through self-help, without any judicial process, cannot commit a breach of the peace. Article 9 makes no attempt to define this crucial term “breach of the peace.” As a result, cases decided under old Article 9 are still valid precedent. It is easy to extract pat definitions of “breach of peace” from the cases, but the predictive value of these definitions is often limited. The opinions speak of force, violence or conduct creating a risk of violence.
Commentary:
This article by James P. Nehf, Thomas F. Sheehan Professor of Law John S. Grimes Fellow from the Indiana University Robert H. McKinney School of Law will be particularly instructive for consumer bankruptcy attorneys, especially those who regularly represent Chapter 13 debtors with vehicles repossessed just before or after filing. While most repossessions occur outside the direct purview of bankruptcy court, the claims resolution process, FDCPA counterclaims, and turnover actions often drag these questions back into the fray.
Key Takeaway #1: Breach of the Peace = No Present Right to Possess
Under § 1692f(6) of the FDCPA, a breach of peace voids the creditor’s “present right to possession.” If that happens, the repo is not just wrongful—it may violate federal law. This is a potentially powerful counterclaim or objection in a Chapter 13 context, especially where the vehicle is central to the debtor’s proposed plan.
Key Takeaway #2: Verbal Objection May Be Enough
The Gonzalez and Shue courts make clear that verbal resistance alone—without fisticuffs or fireworks—can create a jury issue. For consumer advocates, this supports the argument that if the debtor so much as says, “Stop,” and the repo proceeds anyway, that may be enough to nullify the repossessor’s legal standing and open the door to damages or plan recovery.
Key Takeaway #3: Police Involvement is a Double-Edged Sword
If the creditor summons law enforcement, the courts are increasingly clear: that’s a breach of peace. But if the debtor calls the police, as in McCarthy, some courts perversely treat that as the debtor “acquiescing” to the seizure. That’s a troubling trend, as Nehf notes, and risks encouraging debtors to escalate rather than seek lawful intervention.
Key Takeaway #4: Article 9 Remedies Require Precision
The Johnson case is a warning shot. Even when the facts are egregious—a car taken from a non-defaulting debtor with no contractual relationship to the creditor—Article 9 statutory damages are unavailable unless the debtor can prove the creditor had actual knowledge of the debtor’s identity and status. Thankfully, tort claims (conversion, trespass) remain available and may offer better relief.
