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Chicago debt collection attorney repossession

Leasing is a useful way for businesses to acquire equipment if they do not have the money or see the need to purchase the equipment in full. Equipment vendors and leasing companies charge a monthly fee to lend the equipment to the business, sometimes with the option for the business to purchase the equipment at the end of the lease. As with any lease, the lessor must weigh the likelihood that the lessee will be on time with the payments for the duration of the lease. Unfortunately, a business can be unpredictable, and the client may fall behind on their payments despite good credit history. The terms of the lease may give you, as the lessor, the right to repossess the equipment, but repossession is often not the best option.

Problems with Repossession

There are several reasons why you may want to avoid repossessing equipment if a client is not paying their lease:

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Legal Process for Repossessing a VehicleWhen a debtor fails to pay installments on a car loan, an auto lender may have no choice but to repossess the vehicle. Alternatives would be to refinance the loan or to allow the debtor to repay the money owed in a lump sum at a later date. However, the debtor must have a history of reliably making payments before the lender considers those options. Repossession is the surest way to recover money after the debtor defaults on a loan, though the lender may still not recover the entire loss. When repossessing a vehicle, you must follow a legal process that gives the debtor notice and a chance to repay you.

What Allows Repossession

Your right to repossess the vehicle should be clearly stated in the loan contract. Loan agreements typically include security interests, which are properties that can be used as collateral in case the debtor fails to pay the loan. In a contract for a vehicle payment plan, the vehicle is the security interest. When a debtor does not make a scheduled payment, he or she has violated the contract. The security interest identified in the contract will legally allow you to repossess the vehicle as collateral.

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