How and when could your vehicle be repossessed?
And how to get it back once debt buyers get ahold of it
Have you ever missed a payment on your car note? While your vehicle could be repossessed as soon as you miss a payment, it probably won’t happen right away. If you miss a couple of payments, then you will be in breach of the underlying promissory note, which grants security or collateral interest in the vehicle.
At this point, the finance company will be allowed to legally repossess your vehicle. The lien that appears on the title of the vehicle gives the finance company a property interest in the vehicle and is governed by Illinois law.
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Repossession, which refers to any way in which the lienholder* gets the vehicle back in its possession, usually makes people think of the classic example of a tow truck removing a vehicle from a driveway.
Recommended Read: “How I Can Help You With Auto Repossession”
This isn’t always the response. Some people will turn over their vehicle to the dealership once they realize they can no longer afford the payments (or realize the car is junk and not worth fixing), and the dealership will turn over the vehicle to the finance company.
Most debtors think that if they voluntarily give back the car to the dealer and the dealer says, “Don’t worry about it,” their problems with the car are over. The truth of the matter is that the debtor will still owe money on the note and will be obligated to pay back any amount that is still owed on the promissory note after the vehicle will have been sold at auction.
What happens after a repossession?
The law requires the lienholder to send certain documents to the debtor. These documents give the debtor a chance to provide defenses and buy back the car for the full amount. However, most people won’t have a defense, nor the money to buy back the car.
Once those documents are sent and ignored by the debtor, the credit card company has the right to sell the car at an auction. After the car is sold, the creditor will subtract the amount that the creditor received for the sale of the car from the amount that is still owed on the note. Then, the creditor will file a lawsuit against the debtor for the resulting balance.
Why do I need an attorney to assist me when my vehicle has been repossessed?
Oftentimes, the note or the obligation on the original loan is sold to a third-party debt buyer. There is usually a witness who can’t lay a foundation for the document in court. An attorney will know how to utilize the law and certain tactics in a way that requires the debt buyer to prove that they have a right to sue you under the auto loan; many times, the debt buyer will be unable to do this.
What should you know about lienholders?
The Illinois Vehicle Code, 625 ILCS 5/3-114, and the Illinois Uniform Commercial Code, 810 ILCS 5/9-501 et. seq. impose strict requirements on a lienholder trying to sell your car after repossession. The lienholder must:
Notify you that the creditor intends to apply to the Secretary of State for a repossession certificate of title.
Provide you with an “Affidavit of Defense,” which gives you the opportunity to raise any defenses to the repossession that you might have.
Notify you of the opportunities and terms by which you might redeem the car.
Notify you of the date, time, and place of the intended resale of your car.
Conduct the resale in a “commercially reasonable manner.” That is, the lienholder must try and get a fair price for the car.
The lienholder must also prove:
The documents you signed when you bought the car gave it the right to repossess your car.
That the seller gave you proper credit for the resale value of the car.
That it has legitimate ownership of the right to collect on your account.
*Lienholder is the legal term for the company that claims to own the loan that financed the purchase of your car.
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