Opinion ID: 3184502
Heading Depth: 2
Heading Rank: 1

Heading: Goldenstein’s FDCPA Claim

Text: Goldenstein raises two challenges to the District Court’s holding that, because Goldenstein defaulted on his loan, Appellees had a present right to possession of his car as collateral and therefore did not violate the FDCPA. First, he contends that no present right to possession could attach to his car because the loan it secured was made at a usurious rate of interest in violation of Pennsylvania’s Loan Interest and Protection Law (“LIPL”), 41 Pa. Stat. and Cons. Stat. Ann. § 201. Even when the interest rate is usurious, however, the LIPL does not void the entire loan or the legal interest, nor does it make it illegal for a lender to collect an unpaid debt. Instead, the LIPL only makes 8 voidable “the interest specified beyond the lawful rate,” Pa. Dep’t of Banking v. NCAS of Del., LLC, 995 A.2d 422, 440 (Pa. Commw. Ct. 2010) (emphasis omitted) (quoting Mulcahy v. Loftus, 267 A.2d, 872, 873 (Pa. 1970)), and Pennsylvania law expressly permits a secured party to “take possession of the collateral” after default, “without judicial process if it proceeds without breach of the peace,” 13 Pa. Cons. Stat. § 9609. Thus, having admittedly defaulted on his loan— including removing the funds from his bank account without further communication with the lender and failing to make three monthly payments before his car was repossessed— Goldenstein cannot now contest Sovereign’s right to repossess the collateral he posted in the event of just such a default. Second, Goldenstein argues that the repossession was unlawful because his arrearage—assuming he had been accruing interest at a six percent rate as permitted by Pennsylvania law and deducting Sovereign’s first two deductions from his bank account from his overall balance— would have been a mere $9.60, and his failure to make this de minimis payment could not constitute a material breach of the loan contract. That argument, however, finds no support in the LIPL. While that statute provides important protections to borrowers who fall victim to usurious loans, it does not empower borrowers to recalculate what they owe by construing interest paid in excess of the legal rate as paid principal, nor does it preclude lenders from repossessing the collateral on a defaulted loan. See 13 Pa. Cons. Stat. § 9609; Pa. Dep’t of Banking, 995 A.2d at 440. The District Court thus correctly concluded that the Appellees had a present right to possession and did not violate the FDCPA when they repossessed Goldenstein’s car. 9