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Illinois Suspends Vehicle Repossession by Auto LendersThe 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.

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