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Pug Repossession

posted by Bob Lawless

If you missed it, Thursday's New York Times had a story about a debt collector who seized the family's dog over unpaid bills. The pet, a purebred pug, was sold for the equivalent of $800 on eBay which apparently meant it could be seized under German law which allows valuable pets to be seized in repayment of debts. Mutts are exempt.

In the United States, there are businesses who will give purchase-money loans for pets, which are often structured as financing leases. The consequence of nonpayment is the usual for nonpayment -- repossession of the collateral even if it is the family's beloved Fido or Fluffy. There is legislation in Nevada, California and New York that tries to ban the practice, although the statutes are far from a model of clarity about what they make illegal.

We are in the process of revising the LoPucki, Warren & Lawless Secured Transactions text, and users can expect a new pet lending problem as part of Assignment 12 on the limits of what can serve as collateral. Purchase-money loans are clearly not covered by the Credit Practices Rule's policing of abusive security interests in household goods. To make it interesting, our new problem involves a non-purchase money security interest (PMSI) in a pet, but even then we don't think the Credit Practices Rule applies because a dog is not within the rule's definition of "household goods." But, we do think a debtor who filed bankruptcy could avoid a non-PMSI in a household pet under section 522(f) because that section specifically applies to "animals." Of course, to seek the protection of Bankr. Code § 522(f), the debtor has to file bankruptcy and either pay an attorney to bring the avoidance action or have the wherewithal to bring the action pro se. (It also occurs to me that less-experienced attorneys might not be aware of this option.)

For the book, we thought we had come up with a pedagogically useful but somewhat fanciful business that was taking non-PMSI's in the family pet until I was reviewing some bankruptcy files last night for research and just happened upon a case where the collateral for a secured loan was "Yorkshire Terrier." The debtor did not seek to avoid the lien but instead stated an intention to surrender the dog to the creditor.


Hmmm. I understand repo men and fluffy little beasts. But Is it possible to repossess an adult GSD without disturbing the peace? I've always viewed the distinction between legal and illegal self-help repossession as the distinction between theft and robbery. GSDs are typically suspicious of strangers, stand on their prerogatives, and have enormously powerful jaws. The things you might have to do to safely repossess an adult GSD might rise to the level of criminal assault if done to a person. This raises an interesting animal rights/Article 9 question.
(For you non-dog people, German Shepherds make excellent pets if you can keep up with their energy level, and are sufficiently assertive. They are tremendously loyal to their peeps and train beautifully.)

Repo man might have to bring a veterinarian/veterinary nurse with a sedative.

I haven't done research, but I would suspect that some precedent can be found in the thoroughbred horse business for how these issues could be addressed.

In response to a question, yes, we are assuming that the animal is exempt for Bankr. Code § 522(f). Many states do exempt animals, and there is always the wild-card exemptions (which most courts seem to say "count" for purposes of § 522(f)).

I think the more interesting angle here is what warranties came with the pooch as part of the foreclosure sale. It seems that the municipality sold a defective dog. But I also imagine that it was sold as-is.

Also, nice question of whether a private e-Bay auction is commercially reasonable. I suspect so, but it does seem a sketchy way to do a sale for a municipality.

The parallel wouldn't just be race horses, but any livestock, I assume. Perhaps also arowanas, which can cost as much as a horse.

Let me just boast that I got there first--there's a whole problem (2.2.5) involving dogs as collateral in my Business Bankruptcy book. It features a pure-bred racing greyhound named Ambulance Chaser and an unsanctioned racing beagle named Illegal Beagle. (Admittedly, the problem is done for the purpose of teaching proceeds and after acquired property, not for the limits of what may be collateral.) But still.

Please tell me it doesn’t involve liens attaching to puppies...

No liens on puppies (but nice marshaling possibility there...). But on the purse won at the track, and then on a second, after-acquired greyhound that is kept as a pet.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless ([email protected]) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.