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Repossession, colloquially repo, is a "
The extent to which repossession is authorized, and how it may be executed, greatly varies in different jurisdictions (see below). When a lender cannot find the collateral, cannot peacefully obtain it through self-help repossession, or the jurisdiction does not allow self-help repossession, the alternative legal remedy to order the borrower to return the goods (prior to judgment) is replevin.
The existence and handling of repossessions varies greatly between
When a provision of law requires that repossession takes place, the lien holder has a non-delegatable obligation not to cause a
Procedure of a repossession
In the United States, repossessions are carried out pursuant to state laws that permit a creditor with a security interest in goods to take possession of those goods if the debtor defaults under the contract that created the security interest. In particular, all 50 U.S. states and the District of Columbia have enacted (with minor variations) Article 9 of the Uniform Commercial Code, which generally permits security interest holders to repossess goods if a debtor is in default and the repossession can be conducted without a breach of the peace. Being "in default" means that the debtor has failed to fulfill his or her obligations under the contract. The most common forms of default resulting in repossession are failing to make required payments and failing to maintain adequate insurance coverage.
Many U.S. states have enacted additional laws that apply specifically to the repossession of purchased and leased automobiles, and which are intended to afford additional consumer protections. Typical requirements include mandating that auto lenders provide consumers with opportunities to either "reinstate" or "redeem" their purchase or lease contracts after their vehicles have been repossessed. A "reinstatement" entails a consumer paying all of his or her past due amounts plus the creditor's repossession expenses, and then reacquiring the automobile as if the repossession had not occurred. A "redemption" entails the consumer paying off the entire contract balance and then being given ownership of the vehicle free and clear of any contract obligations. If these instances do not occur and the vehicle becomes repossessed, the lien holder is required to notify the debtor of their intent to sell the property. This is usually in the form of a letter that states that if the amount owed is not paid within ten business days, the entity officially takes ownership and may sell the property.
Some consumers believe that they are legally entitled to a "grace period" that prevents creditors from repossessing goods until the payments are a certain number of days overdue. In reality, grace periods are non-compulsory business practices that have been adopted by most consumer lenders through a term in the lending contract. There is nothing legally preventing a creditor with a security interest from repossessing the goods if a payment is late - even if it is only one day overdue - unless the lender has agreed otherwise as a binding term of contract.
Various objects can be repossessed, including
Repossession does not necessarily satisfy the loan. If the repossessor sells the asset for an appropriate amount, and if that amount is less than the amount of the loan, and if the repossessor sues the debtor for the balance (plus reasonable fees if applicable) in a timely manner, the debtor may be liable to pay the balance (sometimes called the "deficiency"). In this case the creditor will be liable for contributory negligence if the creditor auctions the property for less than applicable fair market value. This is because such a failure directly contributes to any remaining deficiency. To avoid this liability, financial institutions will document a source (such as Kelley Blue Book or NADA) to price the collateral for sale. They will also document the condition of the vehicle to justify the sales price of it.
Whether a debtor is actually liable for a balance depends on jurisdiction and on the details of the loan contract. In the case of a nonrecourse debt, for example, the debtor is not personally liable for a deficiency.
Repossession is possible with real estate, commercial and domestic properties.
England and Wales
These numbers and text relate to home mortgage repossessions in England.
- Number of repossessions in England
|Year||Claims Issued||Claims Leading To An Order||Properties Taken Into Possession|
In 2010, there looks to be a downtrend though, as lenders seized 9,400 properties in April, May and June, 400 fewer than in the first quarter of 2010, according to the Council of Mortgage Lenders (CML).
Repossession by self-help is generally illegal and constitutes theft. In most cases, if the debtor is unable or unwilling to pay an outstanding debt, the creditor must first obtain either a court order authorizing the repossession (Vollstreckungsbescheid, only possible if the debtor does not contest the debt) or a regular court judgment. The debt must then be collected by an officer of the court (Gerichtsvollzieher) who exclusively may use force to collect the debt, such as opening a door or enlisting help from police. Neither the creditor nor private debt collection agencies may use force or seize property against the will of the debtor.
- "Vehicle Repossession". 7 May 2021.
- Section 9-609 of the Uniform Commercial Code
- "Car Repossession: Notices the Lender Must Provide". www.thebankruptcysite.org. Retrieved 2019-11-28.
- Web sites describing Ohio's
- Vehicle Repossession: Understanding the Rules of the Road , Federal Trade Commission, November 2008. Retrieved 2011-02-16
- "CML.org.uk". Retrieved 27 April 2017.
- Foundation, Internet Memory. "[ARCHIVED CONTENT] UK Government Web Archive – The National Archives". Archived from the original on 13 May 2007. Retrieved 27 April 2017.
- "Home repossessions fall further in UK". BBC News. 12 August 2010. Retrieved 27 April 2017.
- Bürgerliches Gesetzbuch, §§ 229, 562b, 592 etc.