Arkansas Federal Credit Union improper repossessions $2.35M class action settlement

Arkansas Federal Credit Union agreed to forgive $2.35 million in outstanding balances as part of a settlement resolving claims it violated laws on auto repossessions.

The settlement benefits borrowers, co-borrowers and guarantors on consumer automotive loans from Arkansas Federal Credit Union (AFCU) for which the collateral was repossessed by AFCU between May 15, 2018, and July 23, 2021. Class members must have received post-repossession notices of sale, must not have filed bankruptcy since repossession, must not have settled the finance agreement amount due and must not have had a judgment entered against them in relation to the finance agreement.

AFCU is an Arkansas-based credit union that offers automotive loans, mortgages, personal loans, checking accounts and other services to its members. According to the AFCU website, the credit union boasts over 135,000 member-owners.

However, plaintiffs in a class action lawsuit claim AFCU violates federal laws when repossessing vehicles. Specifically, AFCU allegedly fails to send sufficient repossession notices and post-sale notices to consumers. The notices sent by AFCU failed to comply with federal regulations, the plaintiffs contend.

Article 9 of the Uniform Commercial Code reportedly requires lenders to follow specific regulations when repossessing vehicles. This includes sending sufficient notices to consumers to ensure they understand their rights and options during them auto repossession process. AFCU allegedly fails to comply with these requirements.

AFCU hasn’t admitted any wrongdoing but agreed to a class action settlement to resolve these allegations.

Under the terms of the Arkansas Federal Credit Union auto repossessions settlement, AFCU will forgive $2.35 million in outstanding or deficiency balances owed by class members. The credit union will request that credit reporting agencies delete any related reporting for these debts and AFCU will not provide further adverse information on these accounts.

According to the Arkansas Federal Credit Union repossessions website, there may be tax consequences as a result of this forgiveness. AFCU may issue a 1099-C tax report that reports the forgiven balances as income. Class members are encouraged to speak to a tax professional to understand how these settlement benefits will impact their taxes.

AFCU has also agreed to pay $200,000 to fund notice costs, administration expenses, attorneys’ fees, court costs and other awards.

The deadline for exclusion and objection is Nov. 15, 2022.

The final approval hearing for the auto repossessions settlement is scheduled for Nov. 17, 2022.

No claim form is required to benefit from the Arkansas Federal Credit Union auto repossessions settlement. Class members who do not exclude themselves from the settlement will automatically receive the settlement benefits described above.

Who’s Eligible

Borrowers, co-borrowers and guarantors on consumer automotive loans from Arkansas Federal Credit Union (AFCU) for which the collateral was repossessed by AFCU between 05/15/2018 – 07/23/2021.

Class members must have:

• Received post-repossession notices of sale
• Not have filed bankruptcy since repossession
• Not have settled the finance agreement amount due
• Not have had a judgment entered against them in relation to the finance agreement

Potential Award

Varies

Proof of Purchase

Proof of purchase not applicable

Exclusion and Objection Deadline

11/15/2022

Case Name

Arkansas Federal Credit Union v. Lenoria E Haley and Walter T Morris, Case No. 72CV-21-1024, in the Circuit Court of the Washington County, Arkansas, Civil Division

Final Hearing

11/17/2022

Settlement Website

Haley-MorrisRepoSettlement.com

Claims Administrator

American Legal Claim ServicesLLC
P.O. Box 23650
Jacksonville, FL 32241

Class Counsel

Corey D McGaha PPLC

Defense Counsel

Andrew King
McKenzie Raub
KUTAK ROCK LLP