Title Loan Default and Repossession

[dan]

Several months ago I took a title loan for 2k, (auto value 4k)
After numerous minimum payments and partial pays, I ultimatly defaulted on the loan.
The lender tried to get me to write a check and secure another loan to pay the intrest on the first, but I was not bitting again, they then demanded full payment or the car, I delivered neither.
Two days ago I got a phone call from a repo man asking if I would give him the car.

As I see it my options are:
1. Give up the car or let them take it, and deal with the balance.
2. Try to sell the car first and pay (cash value will not satisfy loan)
3. Litigate. (possibly "Common Law Unconscionability Doctrine", as it pertains to the excessive interest)

Another aspect I would appreciate comment on, is the fact that I alone signed for the title loan even though my wife is a co-owner.
I think U.C.C article 9 states that the debt is still valid, but do they have a valid security interest for "Self Help Repossession" without a court order?

[Anonymous]

As I see it my options are:
1. Give up the car or let them take it, and deal with the balance.
2. Try to sell the car first and pay (cash value will not satisfy loan)
3. Litigate. (possibly "Common Law Unconscionability Doctrine", as it pertains to the excessive interest)

Your state has probably statutorily defined "usury" - the charging of an unlawful interest rate - and your lender is probably within that law, but it is worth checking.

Another aspect I would appreciate comment on, is the fact that I alone signed for the title loan even though my wife is a co-owner. I think U.C.C article 9 states that the debt is still valid, but do they have a valid security interest for "Self Help Repossession" without a court order?

They may have a PMSI (purchase money security interest) in your wife's share, depending upon when you obtained the loan. A PMSI is a loan provided to purchase a specific item where the loan funds are directly applied to the purchase of the asset.

However, if you obtained the loan against a car you already owned, they may have difficulty extinguishing your wife's interest in the car.

[dan]

Thanks for the info - You are correct Illinois has no ceiling on interest rates in most loans.

The contract I signed only states that I granted a "security interest in the vehicle", it does not define a PMSI, if they claimed a PMSI without clear definintion would this be in violation of "TILA"?
In the past year my wife and I had taken two other loans from the same lender, both being paid off in a short time, the third I secured alone.
When I spoke to the repo company they said my wife and I are both listed as borrowers, but I have no way to find out if the paper work has been shuffled, at least not before the repo is executed.
I have found volumes on what to do after repossession but very few proactive measures.
If I where to litigate should I initiate a claim or wait and file a counter suit?
The contract also has an Arbitration Clause,
case law seems to indicate that if I show that the costs are prohibitively expensive, a lawsuit may proceed.
How much is arbitration in a case like this, and what can I expect from the judgement of an arbitrator?
Lastly, can you recommend any books on the basics(rules and procedures) for the Pro Se,
Thanks.

[Anonymous]

The contract I signed only states that I granted a "security interest in the vehicle", it does not define a PMSI, if they claimed a PMSI without clear definintion would this be in violation of "TILA"?

A PMSI results by operation of law, where the criteria for a PMSI have been met. As a PMSI is not a loan, the Truth in Lending Act is not relevant to its formation or enforceabilty.

When I spoke to the repo company they said my wife and I are both listed as borrowers, but I have no way to find out if the paper work has been shuffled, at least not before the repo is executed.

You can try, by contacting the lender.

If I where to litigate should I initiate a claim or wait and file a counter suit?

If you want to file a lawsuit or countersuit, you should consult with a lawyer in your state about whether you have a viable claim, and what it is. You should also discuss the Arbitration Clause within that context, as a local lawyer may be aware of how local courts treat such clauses, or whether there are consumer laws which might allow you to escape the clause if you choose to do so.