Legal Action Procedures - Hire Purchase Loan (Motor Vehicle) - Part 3 - Repossession

We have now come to a quite interesting topic as depicted above. There may be some "hot" scenes such as slander, defamation, car chases,  vulgarities, fist fights and we may even have some "chair throwing" sessions. Yes, sounds a lot like the current political scene and yes, we are actually "talking" about car repossession.

After taking into consideration the mandatory two months of successive defaults and the issuance of the Fourth Schedule giving the Hirer a further 21 (twenty one) days, plus a few more days allowance for the weekend, public holidays, sick leave, emergency leave and a host of other "leaves", THREE months or more has passed. Finally the Repossession Authority was issued and we assume that the car was repossessed.

For a clerk or the officer in charge, this is supposed to be a "happy moment" where the asset of the Bank has been "recovered". However, there will always be a feeling of anxiety and uncertainty of what is coming his/her way when the car, the Repossession Agents and the Hirer who may be accompanied by some "concerned" and "angry" mobs complete with sickles, torches, pitchforks and rakes just to name but a few to "discuss" matters.

Among the requirements for a Repossession Agent after repossession is to make a Police report and then proceed to the Bank for car inspection and photography session. The inspection will focus on the engine and chassis numbers of the car, the overall physical condition of the car recording whatever visible defects such cracks, dents, engine condition as well as making a list of the Hirer's personal belongings.  Upon inspection, the car will be sent to the Bank's panel storage facility who will do the same type of inspection. This is very important to protect the Bank's and the store's interest in the event of any counter claim made by the Hirer.

There are some cases where upon repossession, the car is sent to the store directly due to some security concerns and usually because the car is being chased by some angry mob where inspection will be done later at the store. For a "seasoned" clerk or officer, such situation (events after repossession) will not surprise them anymore. If there is a new clerk or officer or any staff who has just been transferred to the collection department, they will be "released"  to face the situation in order to give training in self composure, crisis management as well as to "harden" the heart. (Yeah, right). The pecking order to face the situation is more or less like the accounting principle of LIFO (Last In, First Out - most junior first) which is of course under some form of supervision (watching from a safe distance) if the situation gets out of control.

When the "party" of Repossession Agents and the Hirer most probably with his/her "entourage" finally arrived and if there is any commotion, the clerk, the officer and the"Pak Guard" (security guard) will try to diffuse the situation by being the umpire or referee of a possible slinging match. Being a referee would have its own risks and hazards where the referee may be caught in the "crosfire" or "friendly fire" or even "unfriendly fire" when adjudged to be biased by either side of the "warring" party. Whatever the case may be, when things have cooled down a bit, discussions and negotiations can commence  with each party given the chance to present their "facts of the case" and again, the Bank's representative being the "judge" (no more refereeing) on the issues raised.

Below are the excerpts of each party's chronology of events leading to the repossession based on a true story but has been "remixed" and adjusted accordingly:

REPOSSESSION AGENT'S VERSION

This morning my colleagues and I stumbled upon (Yeah right. They have been following the bloke for days to study his movement patterns) the Hirer presumably on his way to work. We followed the car and waited for a suitable time to "greet" the hirer.

When the car has been parked, we approached the hirer and greeted him with our best smiles and pleasantries. We introduced ourselves as the agent of the Bank showing him our identity cards, authority cards, certification from AHPCM and the Repossession Authority. We politely asked for the car keys and offered him to come with us to the Bank. However, despite our extreme politeness, the Hirer, without any provocation was hostile towards us and started to hurl abuses. Being sensitive guys, we were hurt by such foul language used which reminds us of the song "Hurt" by the Manhattans. (If you are below 40, you may have to look it up in Youtube). Despite the abuses, we tried our level best to persuade the Hirer to hand over the keys but the Hirer still refused to cooperate and continued with the abuses and further insulted us with the words "bloody idiots who never went to school", "lazy bumps, that's why you morons ended up with this lousy job" and other insults which we may have to sensor because of its X-rated contents as we are not used to such filthy language.

Before losing our patience and with a heavy heart we have no choice but to wrest the car keys from the Hirer while one of my colleagues gathered the Hirer's personal belongings from the car into a plastic bag before handing it over to him. We left the Hirer there since he refused to follow us to the Bank and proceeded to make a police report before coming here. We asked for a higher repossession fee due to the difficulty of taking back the car, the gangster mannerism of the Hirer and the mental and spiritual abuses we have to endure. One of my colleagues even cried while on the way here. That is our story and all of it is true.

THE HIRER'S VERSION

This morning while on the way to work I realized that a car with two or three suspicious looking characters possibly with malicious intentions was following me. After I reached my office and parking the car I was approached by two goons demanding me to get out of the car. Before I was able to react, one of them opened the car door and took the car keys from me. One of them showed me his id card and some sort of Authority card in a flash and then threw the Repossession Authority to my face. I pleaded with them to give me a chance to go to the Bank to settle the matter but they refused and hurl abuses towards me. They were very rude and the language that they used can make a grown man blush with shame.

While I was discussing with those men, another one of them took out my personal belongings and handed it to me saying if I am not satisfied, I can come to the Bank and sort it out and left me there flabbergasted. I am very sad, disappointed, stressed out and almost died of embarrassment since there were a lot people around when it happened. I know I was wrong but I don't deserved to be treated in such a way. For your information, I kept two gold bangles, a golden ring and RM2,000 under the front seat of the car and now it is gone. I demand compensation and harsh punishment for your Agents for being rude and robbing me of my valuables. I have already told my mom, the police and the village head and all my Facebook friends about this and some of them are here with me including my mom to lend me some moral support. I demand justice for me and other Hirers who may face the same predicament.

BANK OFFICER/CLERK VERSION (DEPENDING ON THE SITUATION)

I just got to know about this repossession about an hour ago since the Repossession Authority was issued by Head Office. Nowadays it is the Head Office who issues the Repossession Authority in line with Bank Negara's (Central Bank) latest guideline on tightening the loan recovery procedures (Yeah, it is always "good" to "tai chi" or "push" the blame on "Head Office" or even "Bank Negara", entities unreachable by most borrowers). We used to only "bother" about accounts that are more than three months overdue.We have no choice but to follow the guidelines. You (the hirer) have not paid a single sen towards the account despite our sms, reminders and phone calls (the first "whole truth" statement) so it is quite difficult for us to sympathize with you. 

With regards to our Agents, they have been trained to be courteous and act according to the guidelines. However, if there is a mistake made by them, we wish to apologize and shall give them a stern warning (have to "back up" the Agents if it is apparent the Hirer is pulling a fast one). On the missing items, kindly lodge a report and let the police investigate as this a very serious allegation. After discussion with the manager and after careful consideration, repossession fee is set at RM500.00 (normally the Agents will make some noise on the "low" fee but a promise of more "easy" Repossession Authority will keep them quiet for a while. They are just trying their luck most of the time) There have to be some "give and take" on the part of the Bank and Repossessors otherwise it would be quite difficult to work together.

CONCLUSION

The above scenario is just an example of a myriad of situations when a car is repossessed. You cannot trust the agent or the Hirer 100% so sometimes a bit of experience and "gut feeling" is essential to come up with the right or "almost right" or "totally screwed up" decision. With regards to the repossession fee, it depends on a lot of factors such as the amount overdue, months overdue, the degree of "difficulty" in getting the car back which may include a "buyback" deal involving  local warlords or "Don Corleones" or "Little Napoleans" or whatever "whatchamacallit"who has "jurisdiction" or a "caveat" over the car usually bought over hand to hand from a "continue payment" deal gone sour. There are also cases where it is the Agent who will take the car from the Hirer and will keep it for months for "fermentation" until it is "ripe" enough to command a higher repossession fee and of course such Agents are not tolerated and will be blacklisted by the Banks and AHPCM.

Whatever it is, when a car has been repossessed, the Bank must sent a Notice called the Fifth Schedule as provided in Section 16 (3) of the Hire Purchase Act 1967 (Amendment 2010). This is an excerpt of the Section:

The Fifth Schedule must be sent within 21 (twenty one) days from the date of repossession. Otherwise, the Bank will lose its rights in the Hire Purchase agreement. However, if  the Hirer exercises his/her right to take back the car, the Hire Purchase Agreement shall continue as if the Fifth Schedule has been sent.

In Section 17 (1) , Bank is not allowed to sell the repossessed car without the consent of the Hirer before expiry of the 21 (twenty one) days  given in the Fifth Schedule. The ones in the red box that is Section 17A and 17B are about the "permit" or permission given to the Registered Repossession Agent as discussed previously.

Below is a sample of a Fifth Schedule:

The Fifth Schedule has two main parts or rather choices given to the hirer. We shall look at the first part which is shown below:

This part gives the Hirer the opportunity to "reactivate" the Hire Purchase Agreement by paying all the arrears in instalment, late charges and other costs.

The second part gives an option to full settle the loan after taking into consideration the repossession cost, storage costs and other incidental costs after deducting the statutory "rebate" calculated beforehand. The excess or shortfall that is due to the Hirer and the Bank respectively if the car is sold at the estimated price given is also stated in the Fifth Sxhedule. The estimated market value is equivalent to "Forced Sale Value" where it depends on the condition of the car. The Bank will usually give a "conservative" value as a precautionary measure in the event the car fails to attract any bidders during the public auction.

The Hirer also has the right to give a notice in writing to the Owner/Bank within the 21 days before the expiry of the Fifth Schedule to introduce an individual who wants to buy the car at a price not less than the Fifth Schedule's estimated value in CASH. This right is provided for in Section 18 (1)(a)(ii) :

Upon expiry of the Fifth Schedule, the Bank is free to sell the car. How is it done and what is the Bank's next course of action? We shall continue in Part 4...