An auto shut off device is a device installed on a vehicle by a car dealer that is usually a buy here, pay here type auto dealer. If you do not make your payments to the dealership timely, the device will be activated and it disables the vehicle until a payment is made and the buyer obtains a new code. If a payment is not made, this shut off device allows the dealership to locate the vehicle in order to repossess it. An article by Gary Hoffman that discusses auto shut off devices in more detail is at auto.aol.com.
When a bankruptcy is filed the automatic stay goes into effect which prohibits a creditor from taking any action to collect a debt. The automatic stay prohibits the continued use of the automatic shut off device in the vehicle.
A bankruptcy attorney should take the initiative upon the filing of the bankruptcy case and do the following to protect her client:
1) Notify the car dealership of the bankruptcy filing in writing and follow up with a phone call;
2) Request in writing that the auto dealer either remove or disable the device permanently;
3) Put the creditor on notice that if the creditor does not remove or disable the devise on a permanent basis, they are in violation of the automatic stay and;
4) Inform the creditor that if the vehicle is disabled due to an error or mistake with the auto shut off device, the attorney will file a motion for contempt against the car dealership for violating the automatic stay and seek damages and attorney fees.
There are very few cases where a car dealership has either refused to remove the auto shut off device or refused to disable the device.
The U.S. Bankruptcy Judge Audrey R. Evans in Arkansas held that the creditor’s refusal to disable or remove the device and requiring the debtor to call in periodically to obtain a code was a violation of the automatic stay. See In Re: Hampton. The Hampton case also goes into a great deal of detail on the process the customer must go through in order to obtain codes for these devices and how the work. Further the facts in the Hampton case shows the difficulty many customers have in getting accurate codes sometimes leaving the debtor stranded with a disabled vehicle. The Hampton Court reasoned the creditor has the responsibility to ensure that no violation of the automatic stay occurs and the creditors should take whatever actions are necessary and appropriate to achieve this goal citing O’Neal v. Beneficial of Tennessee (In Re O’Neal), 165 BR. 859,862 (Bankr. M.D. Tenn 1994). The Hampton Court awarded the debtor $2,752.86 in actual damages for out of pocket expenses while her vehicle was disabled and attorney fees.
Debtors should tell your attorney when you are preparing your bankruptcy petition if you have an auto shut off devise and attorneys should question their clients about this relatively new technology as more and more buy here pay here dealerships engage in these devices to mitigate their risk of non-payment.
Cynthia T. Lawson is the Managing Partner of the Bond & Botes Law Offices location in Knoxville, Tennessee. She holds a Bachelor of Science from East Tennessee State University, and a Juris Doctorate from University of Memphis, Cecil C. Humphreys School of Law. She currently serves as a Mentor for the Moment in bankruptcy.Read her full bio here.