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.

Creditors often need to address situations where debtors default on loans. For auto lenders, these situations require a timely response, since a vehicle used as collateral for a loan may be moved, concealed, or damaged by a debtor, and a creditor will want to recover the collateral quickly to protect its financial interests. When repossessing a vehicle, a creditor may use the replevin process, and they will need to follow specific procedures and ensure they are complying with their legal requirements.

Pursuing a Replevin Action

In some cases, creditors may be able to complete a repossession by asking a debtor to voluntarily turn over a vehicle, or they may take possession of a car that is in a public location. However, if a repossession would involve a “breach of peace,” a creditor may need to use replevin. For example, if a vehicle is locked inside a person’s garage, a creditor would not be able to enter the location and take possession of the vehicle without first receiving authorization to do so.

A creditor can begin the replevin process by filing a complaint in court. This complaint will describe the property that is being repossessed and state that the creditor has the right to take possession of a vehicle that has been wrongfully detained or concealed by the debtor. The debtor must be provided with written notice of the complaint at least five days before the date of a court hearing that will address the replevin request. However, this notice requirement may be waived if the creditor provides evidence that the debtor is likely to conceal, damage, destroy, or transfer ownership of the vehicle or remove it from the state.

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.

As a secured creditor, there may come a point in the debt collection process when you decide that you are best served by repossessing the collateral property. Auto lenders commonly deal with repossessing vehicles when the debtor defaults on their loan and shows no intention of working with the lender to catch up on the missed payments. However, debtors may not cooperate when you try to repossess their vehicle, whether they actively deny your repossession efforts or try to hide the vehicle from you. In these situations, you can force compliance by requesting a replevin or detinue from the court.

What Are Replevin and Detinue?

Replevin and detinue are similar legal actions that can help you recover a property held by a debtor. The main differences are:

• Replevin allows police to seize property and return it to the creditor and is more generally used when a defendant wrongfully took a property.
• Detinue orders the defendant to surrender the property to the creditor because they are wrongfully withholding it.

With replevin, you may be able to seize the property after the defendant has been given a five-day notice. With detinue, you often must wait until the end of the case to retrieve the property. With both actions, you must be able to clearly identify the property and prove that you have a superior claim to ownership, which for auto lenders would be proving that the defendant has defaulted on their loan agreement. Along with retrieving the property, you may be able to collect damages from the defendant if there was a cost that was related to them withholding the property. If the property cannot be found, the court will order the defendant to pay you the monetary value of the property.

Repossession is often the last resort for auto lenders when dealing with debtors who are behind on their loan payments. You are more likely to retrieve full value on the loan if the debtor continues to make payments than if you repossess the vehicle and resell it. There is also the hassle of notifying the debtor of your intention to repossess and hiring someone to tow the vehicle for you. However, the process can be simpler if the debtor voluntarily turns the vehicle over for repossession. In most cases, the debtor will be the one to suggest voluntary repossession.

How It Works

The result of voluntary repossession is the same as involuntary repossession. You will regain possession of the vehicle and sell it to recuperate the money owed on the loan. The debtor will be liable for any deficiency between what you receive in the sale and what remains from the loan. The difference is that the debtor agrees to surrender the vehicle and will deliver it to you at a time and place of your choosing. The debtor’s compliance means that you will not be fighting over whether you have the right to repossess the vehicle or using a towing service to retrieve the vehicle.

Why Voluntary Repossession?

The debtor still has much to lose by surrendering the vehicle to you. They are losing possession of the vehicle and defaulting on the loan, which will hurt their credit. However, they may prefer voluntary repossession if they believe repossession will be unavoidable: