Detinue in Virginia – How Secured Creditors Can Recover Their Collateral
Since the recession and credit crisis of 2008, a growing portion of my practice involves helping creditors recover their collateral. Virginia, like most states, allows automobile lenders and other secured creditors to use self-help to repossess cars and other collateral, but it seems that since the downturn, many borrowers are either hiding their property or storing it in such a way that the repo man can not get to it.
Virginia civil procedure, however, has a ready-made remedy for this situation. Creditors can bring an action in detinue, and there by seek an order for possession of the collateral. Most creditors are familiar with the term replevin. These two causes of action, Detinue and Replevin, are similar in substance. The main difference seems to be that at common law, all one had to prove in a detinue action was that one had a superior right to the goods, while with replevin, the plaintiff had to show that the goods were wrongfully taken away or that their continued detention was otherwise unlawful. As a practical matter, replevin has been abolished by statute in Virginia, so we use detinue.
The procedure is straight forward. The plaintiff can file its action in the General District Court if the balance owed on the contract is less that $25,000.00, but must file in Circuit Court for amounts above this. The law provides that whatever is owed on the security agreement is assumed to be the alternative value of the collateral. If the creditor can prove that the loan is in default, that there is a balance owed on the contract, and that it possesses a valid security interest for a particular piece of collateral, then the Court will order judgment for the creditor.
There is sometimes confusion at this point about the nature of the judgment. The statute says that the Court should determine how much is due and owing on the contract. As I said above, this is considered to be the alternative value of the collateral. The Court should then provide a reasonable period of time (usually 10 days) for the Defendant to pay the alternative value. If the Defendant fails to do so, then the Plaintiff has two options: it can issue a writ of possession and seek to recover the collateral. If it chooses not to, or if the collateral still cannot be discovered or located, it may then execute on the judgment as it would a normal judgment, by garnishment or other execution. If the Plaintiff does recover the collateral by writ of possession, however, it may not continue to issue garnishments for any deficiency, but rather must file a new action to have the court determine the deficiency.
Although filing a detinue action is often seen as a last resort when the automobile or other collateral cannot be repossessed, I often advise clients that it should be used more frequently. Often, if the vehicle cannot quickly be located by a repossession agent, the repossession order will sometimes sit, unfilled, for a significant period of time while the collateral continues to depreciate. The same borrower, who might be willing to play games with the repossession agent, will often be willing to surrender the collateral once the lawsuit is filed, and they are visited by the sheriff, either before or after judgment is entered. Last, after the judgment is entered, if it is determined that the collateral is worthless, the judgment may be docketed and executed on as a money judgment, with no further step needed.