The vehicle-financing arm of General Motors Corp. engaged in unlawful collection activities and must refund millions of dollars to customers, a California court has ruled, according to an Associated Press (AP) report.

Santa Clara County Superior Court Judge Jack Komar ruled that General Motors Acceptance Corp., after it repossessed as many as 30,000 cars in California, did not properly inform the vehicles' owners of all their rights on how they could recover their vehicles before they were sold at auction, according to an AP story by David Kravets.

GMAC, Komar ruled, did not inform its defaulting customers that under the law they could automatically get a 10-day reprieve from the vehicle being auctioned off if they just asked for it, AP reported.

"The evidence is clear that the notices used by GMAC did not expressly state that an extension request must and will be granted," Komar wrote in a decision made public Dec. 8.

Mill Valley attorney Mark Chavez, who brought the lawsuit on behalf of an estimated 30,000 Californians whose GMAC-financed cars were repossessed between 1994 and 2001, said victims could be owed thousands of dollars each, according to AP. Under the ruling, Chavez said, GMAC must return or forgive about $125 million to California customers.

"The notice has to say, when they take your car, you have a right to a 10-day extension in time to get your vehicle, 10 days to come up with the money to make past due payments," Chavez said, according to Kravets' AP story.

Chavez added that the intent of the law, first adopted by the California Legislature in 1962, was to give "the borrower every opportunity to reclaim their vehicle rather than have it sold at auction," AP reported.

In the past, if a car owner owed GMAC $10,000 and GMAC repossessed and sold the car for $8,000, the owner would still owe GMAC the remaining $2,000 difference. Under the new ruling, the owner is no longer required to pay GMAC the $2,000. Or, if the owner paid the $2,000, a refund of that amount is in order, Chavez said. The court also ordered GMAC to clear the credit records of vehicle buyers whose credit histories were blemished by GMAC, according to AP.

Bill Solomon, GMAC's general counsel, said the company was not "trying to hide the ball" on its customers, according to AP. Solomon said Chavez was distorting how much GMAC might owe at the outcome of the damages phase of the trial, which is scheduled to begin next year.

"I think potentially in the millions, it could be single digit millions," Solomon said of GMAC's eventual payout, according to AP.

Kathryn Brown, a 73-year-old Northern California woman from Cottonwood, said she is owed about $4,000 after her pickup was repossessed in 2000. She had co-signed for the truck for her son, who lost his job and later died, she said. Brown could not make the $300 monthly payments and the truck was repossessed, according to AP.

GMAC sold the car without informing her that she could have averted the sale for 10 days to allow her to make good on the loan, AP reported.

Under the ruling, she is owed $4,000 -- the difference between the price of the car fetched at auction and the amount needed to satisfy the truck's outstanding loan balance, Chavez said, according to AP.

"That wasn't right, considering that I didn't know all of the laws of California," Brown said, according to the Associated Press. "They didn't specifically put in what they were supposed to in the letter they sent me."