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Mike Mitchem, owner of North Star Towing & Recovery, says his business is up 50 percent over last year. |
BY BILL FREEHLING
The repo men have been out in full force this year, according to Fredericksburg-area towing companies.
Repossessions occur when people stop making their payments on vehicles. Lenders hire tow-truck drivers to pick up the vehicles and return them to the financial institutions.
Mike Mitchem, owner of North Star Towing & Recovery in Fredericksburg, has been doing repossessions for 14 years and has had his own business for three years. He has done more repo work this year than in any other. He estimates volume is up 50 percent from last year.
Mitchem said he was repossessing about 100 cars a month earlier this year, in a territory that stretched from Richmond to Northern Virginia. He said volume has slowed somewhat in the past few months but is still high.
Fredericksburg's increased repo volume is consistent with a national trend. More than 1.6 million vehicles are expected to be repossessed in the U.S. this year, said Tom Webb, chief economist for Manheim, which operates auto auctions across the country, including one in the Fredericksburg area.
Webb said that tally is up 10 percent from repossessions in 2007, which itself was a record year. He attributes it to general economic weakness, higher gas prices and the end of a credit cycle that saw liberal loans going to people who couldn't afford pricey vehicles.
Webb expects this year's tightening credit environment to significantly reduce repossessions next year. But for now, he said, cars of all makes and models are being repossessed--with California, Florida, Michigan, Ohio, Arizona and Nevada seeing some of the highest rates.
Much of the repo work is done at night. Mitchem said his company typically goes out to get the car the same day it hears from the financial institution that owns it. He allows the car's owner to get child seats, or anything pertaining to a child's safety, out before towing the car, but otherwise the owner has to come to the North Star storage lot to collect any personal belongings left in the vehicle.
Virginia law gives the car owner 10 days to get it back before resale. Mitchem said most lenders allow 15 days and are pretty lenient if a payment plan can be worked out. Barring that, the car typically goes to auction.
Vehicle finance companies lose more than $8,000 for each vehicle they repossess, according to the American Financial Services Association. They therefore take this step only as a last resort.
To prevent this, according to the AFSA, finance companies are closely monitoring customers who they suspect might get into trouble with payments, and contacting them earlier. There's no exact timetable for when the repossession process begins. It's based on factors including how communicative debtors have been about their individual situations.
It's not just vehicles that are being repossessed.
Chris Shanks, co-owner of Shanks Towing in Spotsylvania County, said he has been repossessing a lot of heavy equipment of late--including bulldozers, backhoes and other machines connected to slowing construction.
"It's gone through the roof," Shanks said about his company's repo workload.
It's not just construction equipment, either. Shanks has been towing away tractor-trailers from people who can't afford to operate them due to higher fuel prices, and he has even towed tow trucks.
Both Shanks and Mitchem said the job is sometimes unpleasant, but they said most people seem to know it's coming and understand it's not the tow-truck driver's fault. Often they collect the vehicle without talking to anyone.
Not everyone is so understanding. Mitchem has had dogs bite him, and one man pulled a gun on him (but didn't fire). He said his large size usually intimidates the car owner. He has to get himself into a certain mind-set before doing the work.
Both Shanks and Mitchem have seen a variety of makes and models being repossessed in the area.
"No one is immune to what's going on out here," Shanks said.
Bill Freehling: 540/374-5405
Email: bfreehling@freelancestar.com
