CARES ACT - suspends 10% penalty on retirement account withdrawals up to $100,000

The CARES Act, which was adopted in response to the Corona Virus/Covid-19 crises includes some important provisions regarding your protected retirement accounts.  Most people can withdraw up to $100,000 from the accounts without a penalty, and with an extended time to pay taxes that are due on the money. This should come in handy for some of our clients who are paying settlements on floorplan defense cases. 

If you are a senior and are lucky enough not to need a distribution from your account, the minimum distribution requirement is also suspended. This should help you form having to sell stocks at a crisis-level low point. 

https://www.nerdwallet.com/blog/investing/cashing-out-401k-covid-19/

Nextgear, Automotive Finance Corporation and the Covid-19 Pandemic

Attorney Keith Hagan and I have been defending dealers from suits by Nextgear for over two years. Nextgear has been filing about 1,000 suits per year in Hamilton County, Indiana, and that's in good economic times.  Automotive Finance Corporation (AFC) has been filing quite a few less than Nextgear in Marion County, Indiana.

We have generally been successful in cutting deals with Nextgear when our clients have enough assets or cash flow to make a serious offer.  AFC has been a tougher nut, but we have completed deals with them too. 

With the COVID-19 shutdowns, we are living in a different world now, but I'm not sure Nextgear has gotten the Memo. Nextgear is continuing to file lawsuits as if everything is normal.  Everything is not normal.  Independent dealers are looking at 3 months or more with virtually no revenue. Even thoughs who have left the business and are trying to make a new life find that bringing home a living income will be tough. 

I predict that the vast majority of the dealers and guarantors that Nextgear sues over the next 6 months, will ultimately just file bankruptcy.  We will still take cases from dealers who want our services (and we lowered our fees), but I will urge them not to settle if it means taking food off their table. 

If Nextgear wants to keep its customer base, it should suspend floorplan fees and curtailment requirements immediately. Otherwise, instead of 1,000 dealers to sue next year, they will have at least 10,000, or half their customers. 

If there is any good news for the folks who are sued by Nextgear, if after they get a judgment against you you eventually pick yourself up and turn around your financial life and start making a good income, it is possible to negotiate with Nextgear to get a discount on the judgment owed. We can help you with this.  As part of the deal, we can negotiate issues relating to the KO book.

I will update this post later, but I wanted to get something down to let people know that if they feel trapped by their floorplan lender, in the wake of the corona virus crisis, they aren't alone, and the system will have to adapt to make it possible to move forward. 

Have you been sued by Automotive Finance Corporation in Indiana?

We have noticed an uptick in lawsuits by Automotive Finance Corporation (AFC) against dealers on floorplan loans here in our home state of Indiana. Over the past few years, we have handled more than a hundred floorplan lawsuits by Nextgear, but just a few by AFC. The reason was Nextgear has rather consistently filed about a hundred cases a month.  AFC, generally filed less than a tenth of that, at least until recent months that is.  Since last fall, AFC seems to have increased the number of cases it files in Indiana. 

If you are looking for an Indiana attorney who is experienced in Floorplan litigation, whether you have been sued by Nextgear, or AFC, or Carbucks, Westlake Flooring, Floorplan Express (Xpress), Auction Credit, City Auto Finance, Auto Use, or any other company, please call us at 317-662-4529.   

Have you been sued by Automotive Finance Corporation in Indiana?

We have noticed an uptick in lawsuit activity by Automotive Finance Corporation, -also known as "AFC".  For the past two and a half years, Keith Hagan and I have been handling a lot of dealer floorplan defense cases against Nextgear Capital, and a few cases against AFC. This is because Nextgear historically sued a lot more dealers than AFC.  In December 2019 though, it appears that AFC filed more than 30 cases.

If you are looking for an experienced Indiana attorney to represent you to defend you in an Indiana case by AFC (or Nextgear or any other floorplanner), please call us.  317-662-4529

Court of Appeals Reverses Denial of Class Certification in Red Barn Motors v Nextgear case.

In the Red Barn Motors v. Nextgear Capital Inc. case the 7th Circuit Court of Appeals reversed a district court ruling denying a motion for class certification.  This means that the plaintiff dealers have the chance to form a class to seek recovery for all dealers in the same shoes.  What are the allegations?  The primary allegation is that Nextgear charged interest during a time-period when they had not yet advanced money. 

This is not my case. This case was filed long before I started taking cases involving Nextgear. Even so, I am glad the plaintiff's lawyer prevailed on this issue.  Here's a link of a writeup on the case. 

My office regularly defends dealers when they are sued by Nextgear. We will try to figure out the best way to use this ruling to our advantage in our defensive cases. 

Another Hurricane - Another Rash of Dealer Floorplan Lawsuits?

As I write this, Hurricane Florence just hit North Carolina and South Carolina.  Based on what we saw with Hurricane Harvey last year, we can expect that a lot of car dealers will be especially hard-hit. 

We had a number of car dealers from Houston to Louisiana hire us to defend dealer floorplan lawsuits, mostly by Nextgear.  These dealers were, for the most part, established businesses that couldn't keep current on the fees and curtailments that they were being charged by their floorplan lenders. 

If you find yourself with large storm losses, I suggest that you first talk to a peer dealer who faced a similar position but worked through it.

Talk to your accountant, talk to your insurance representative, talk to FEMA.  Don't expect a lot of understanding from your floorplanner.  Look at the possibility of getting an SBA loan to cover your floorplan debt. 

If you get sued by your floorplan lender in Indiana, call us at 317-662-4529. The worst thing you can do is let the floorplan company get a default judgment on a lawsuit. 

(Video from ABC News via youtube.com) 

My Accidental Practice Area Representing Out-of-State Dealers against Floorplanning Companies

The vast majority of my practice involves representing consumers bringing claims under consumer protection statutes like he Fair Debt Collection Practices Act, Fair Credit Reporting Act, Credit Services Organizations Act, Telephone Consumer Privacy Act, and more.  Recently, as it so happens I have been contacted by multiple individuals who have needed help because were alleged to have signed personal guarantees on behalf of car dealers on Floorplanning contracts, and I have built up some experience in this area. As a member of the National Association of Consumer Advocates, I have pledged not to represent corporations against consumers, but I have no problem representing businesses and individual proprietors in cases where a business is on the other side.

A floorplanning company provides financing to auto dealers for their inventory, taking a lien on the vehicles and releasing the liens as the vehicles are sold. The financing of the lot of cars is called a "floorplan".  As it so happens, two of the most important floorplanning companies in the United States are based immediately to the north of my homebase in Indianapolis, Indiana, in the northern suburbs of Hamilton County. These copanies are Automotive Serices Corporation (AFC) and Nextgear Capital, Inc. (Nextgeer). The floorplan contracts issued by these companies often have provisions that suits are to be brought in Hamilton County, Indiana. This gives the companies the ability to sue dealers and personal guarantors from all over the country in Noblesville, Indiana.

If you are a dealer or a personal  guarantor of a dealership that gets sued by ASC in Indiana, you should be aware that even if you or your dealership legitimately owes money to the floorplanner, you may still find it in your interest to hire a lawyer to contest the suit. For one thing, there may be the opportunity to settle short or to get favorable payment plans.  Another thing is that the lawsuit against you may include a claim that payments owed to the dealer were fraudulently diverted.  Fraud is hard to prove when contested, but it is easy for them to get a default judgment for fraud.  If they get a judgment for fraud, you likely will not be able to discharge that judgment in bankruptcy.

The bottom line is that if you are sued by ASC or Nextgear in Indiana, you should strongly consider hiring an attorney to defend you. For a retainer less than the amount owed on one car, you may be able to protect yourself from much higher liability.

Note that if you are an Indiana dealer sued by ASC or Nextgear, I will probably not personally represent you, I will probably refer you to another attorney; however if you are from out-of-Indiana I can provide you affordable options for defense of floorplanning suits.