UPDATE: Illinois Suspends Vehicle Repossession by Auto Lenders

 Posted on December 28, 2021 in Auto Lenders

Originally published: May 31, 2020 -- Updated: December 28, 2021

UPDATE: While Governor Pritzker’s executive order had placed a halt on vehicle repossessions, this restriction expired on August 22, 2020. For more than a year, auto lenders and other creditors have been able to engage in asset recovery methods and repossess property in cases where debtors have defaulted on loan payments. However, as the COVID-19 pandemic continues to affect people, some creditors may be hesitant to move forward with repossessions, and they may be looking to determine whether other alternatives are available.

In many cases, loan modifications are the best option for helping debtors address missed payments and other issues that affect their ability to repay an auto loan. Creditors may offer modifications such as the forgiveness of late fees, the deferral of missed payments, or the extension of the term of a loan. By providing options to debtors, this may encourage them to continue making ongoing payments and avoid a repossession while minimizing the creditor’s financial losses and the hardship experienced by the debtor.

While creditors may have options for collecting debts, repossessing vehicles or other property, or seeking judgments against debtors, they may want to avoid taking actions that could put people at risk of harm. By understanding whether alternatives to repossession may be available, creditors can determine the best ways to reach agreements with debtors, avoid the time and expense involved in taking legal action, and find solutions that will protect against future financial losses. When addressing these issues, it is important to work with a Chicago debt collection attorney who can advise creditors of their rights and ensure that they follow the correct procedures. For legal help with matters related to debt collection, contact Dimand Walinski Law Offices, P.C. today at 312-704-0771.

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The COVID-19 pandemic has affected all areas of commercial lending, including automotive loans. With millions of Americans out of work, consumers may have more difficulty paying off the loan on their vehicle. Auto lenders have ways to handle clients who have fallen behind on loan payments, whether it is modifying the terms of the loan to give the client leeway or pursuing debt collection. However, repossession of the vehicle may not be an option right now, depending on where the client lives. You must examine recent laws and executive orders to ensure that you are not committing a violation when repossessing a vehicle.

Temporary Freeze on Repossession

Since the start of the crisis, states have differed on whether they will continue to allow vehicle repossession when a debtor is unable to make loan payments. Some states have strictly prohibited it, while others are merely recommending a pause on repossessions. In Illinois, Gov. J.B. Pritzker issued an executive order that suspended vehicle repossessions for as long as the state’s disaster proclamation is in effect. As of May 29, the disaster proclamation has been extended until June 27. The executive order cited several reasons for suspending vehicle repossessions:

• Many Illinois residents are facing financial hardship because of the lockdown imposed by the state.
• Having a vehicle is essential to public safety in order to obtain supplies and travel in the event of a medical emergency.
• Essential workers rely on their vehicles in order to get to their workplaces.
• Individual vehicles allow residents to travel while practicing social distancing.

Your Options as a Lender

Illinois’ executive order states that the pause on vehicle repossession does not affect your client’s obligation to continue paying the loan. Once the order is lifted, you may be able to move forward with repossession efforts if that is the stage you are at in the debt collection process. Until then, you can communicate with your clients to make sure they understand the consequences of missing loan payments and decide whether to allow deferments on payments in some cases.

Contact a Chicago Creditor’s Rights Lawyer

The rules have changed for what creditors are allowed to do during the COVID-19 pandemic. If you act like everything is business as usual, you risk violating one of these new rules, which may lead to fines or other punishments. An Illinois creditor’s rights attorney at Dimand Walinski Law Offices, P.C., can check that all of your debt collection practices are in compliance with current state and federal laws. Schedule a consultation by calling 312-704-0771.

Sources:

https://chicago.cbslocal.com/2020/08/31/illinois-allows-car-repossessions-to-resume-one-recovery-agent-says-it-may-put-him-in-danger/

https://www2.illinois.gov/Pages/Executive-Orders/ExecutiveOrder2020-16.aspx