Chrysler Corp. officials have agreed to pay an $8,500 civil penalty to the Montgomery County government for an alleged violation of a county law regulating the repossession of vehicles bought on credit.
The law, enforced by the Montgomery County Office of Consumer Affairs, states that delinquent debtors may redeem their repossessed cars and trucks by paying only the amount of which they are in arrears.
But on at least seven occasions last year, in cases involving Montgomery County residents, regional representatives of Chrysler Credit Corp. demanded that the entire amount of the outstanding loan balance be paid to redeem repossessed vehicles.
Without admitting guilt, Chrysler Credit agreed to comply with county laws and return repossessed vehicles in exchange for payment of the overdue amount.
Chrysler Credit finances cars and trucks bought from Chrysler dealers.
Outraged debtors filed complaints with the consumer affairs office, said George Rose, director of the office's automotive division.
By demanding the entire balance, "Chrysler Credit was making it almost impossible for people to get their cars back," Rose said. "Most people can come up with the money to cover two or three back notes. But most of them can't come up with the full amount of the unpaid loan."
The consumer affairs office initially filed a complaint against Chrysler Credit, and the company chose to enter a consent agreement -- in which it admits no wrongdoing -- to set matters straight.
Chrysler Credit entered a similar agreement in Montgomery County in 1976, after being accused of demanding full payment in repossessions. In that case, the company agreed to pay a $5,000 penalty, according to county officials.
However, under some circumstances -- fraudulent credit applications and cases in which the delinquent debtor attempts to hide the affected vehicle -- the company retains the right to demand payment of the full balance before surrendering the repossessed car or truck, Rose said.
"Apparently, we've got some people down there who just weren't following what we normally do in all other states" regarding repossessions, a Chrysler spokesman said in Detroit.
"We entered the consent agreement, because we're trying to correct this matter so that it won't happen again," the Chrysler spokesman said.
"We don't want to repossess vehicles," he said. "That's not our style."