What Options Are Available to a Creditor When Repossessing a Vehicle?

 Posted on February 21,2023 in Auto Lenders

Repossession of a vehicle is an effective way for auto lenders to recoup losses in the event that a customer has not been able to meet their contractual payment obligations. However, when a creditor repossesses a vehicle from a borrower, it can be a tricky and uncertain process. Creditors need to be aware of their legal rights and the options available to them in these situations.

Due Process Requirements

The first step for any creditor is to familiarize themselves with the due process requirements in their state. Creditors may have certain duties they are required to fulfill before they can legally repossess a vehicle. In some states, a creditor may be required to provide written notice to the borrower, informing them of their right to cure the default. However, Illinois law does not require a creditor to notify a debtor prior to proceeding with a repossession. If necessary, creditors may still contact debtors to notify them of missed payments and inform them of the consequences of defaulting on a debt.

When repossessing a vehicle, creditors will often work with a licensed repossession agency. This agency must purchase a recovery ticket from the Illinois Commerce Commission for each vehicle that is repossessed. The recovery ticket will specify the date and time the repossession took place, the Vehicle Identification Number (VIN), the name of the repossession agency, and the name of the law enforcement official who was informed about the repossession. The recovery ticket must be kept in the vehicle until it is sold or returned to the debtor, and it must also be kept on file for two years.

When a vehicle is repossessed, the repossession agency must take a complete inventory of any of the debtor's personal property that was in the vehicle. The debtor must be notified of the location of these items and given the opportunity to reclaim them. A written notice must be sent to the debtor within 45 days before the agency plans to dispose of the debtor's personal effects, and if the debtor does not claim the items within 45 days after the notice was sent, the agency may dispose of the items at their discretion.

If the debtor has paid off at least 30 percent of the total principal of the auto loan, they must be given the opportunity to reinstate the loan. They can do so by making up any delinquent payments and paying all related fees, including late fees, processing fees, and the costs of repossessing the vehicle, storing it, and preparing it to be sold. The debtor can reinstate the loan within 21 days after the date of repossession. If a debtor had not paid at least 30 percent of the loan, they may be required to pay off the full amount of the loan before they can regain possession of the vehicle.

Contact Our Chicago Vehicle Repossession Lawyers

When it comes time for creditors to reclaim vehicles from delinquent borrowers, there are several options available, including voluntary surrender, loan reinstatement, or repossession and liquidation of the collateral on a delinquent loan. When determining how best to move forward with these cases, creditors can protect themselves legally and financially by working with a Cook County creditors' rights attorney. At Dimand Walinski Law Offices, P.C., we can ensure that repossessions are carried out correctly while protecting the interests of auto lenders. Call us at 312-704-0771 to learn more.

Sources:

https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3384&ChapterID=24

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=062500050K3-114