Creditor exposure to class claims under the UCC – are stale, consumer loan defaults worth pursuing?
Schenewerk & Finkenbinder represents lenders and creditors in pursuing various commercial and consumer credit defaults. Certain liability risks may apply for creditors who delay pursuing collection of delinquent accounts if their past default notices are not compliant with state or federal regulations.
Recently, S&F attorney Tom Hamilton obtained dismissal of counterclaims filed against an S&F lender client that was counter-sued by a consumer borrower. After filing suit to collect an eight-year-old, delinquent consumer auto loan account, the lender client’s delinquent borrower counter-sued the lender under Article 9 of Missouri’s version of the Uniform Commercial Code – alleging various technical violations of Article 9.
S&F obtained dismissal of the counterclaims, and avoided possible concerted action claims against the lender for potentially larger-scale, Article 9 violations.
Commercial creditors should always assess the risk of collecting long-delinquent accounts because of possible issues with the technical form of their default notices. If you are a creditor and have questions about these issues we would love the opportunity to discuss how to avoid similar pitfalls.