Vehicle repossession is the act of a creditor taking physical possession of the debtor’s vehicle without warning or notice
Repossession is when a borrower takes out a secured loan to pay for the vehicle. The lender collateralizes the loan by retaining full ownership of the vehicle as security for repayment of the loan. The title does not legally pass to the borrower until the loan terms are satisfied and full payment has been made for the vehicle.
Should the borrower not make the required payments based on the terms of the loan, the borrower is in default of the loan. This allows the lender to lawfully take possession of the vehicle.
The property’s repossession does not require court approval before the physical repossession because the property’s title is technically still in the lender’s name, as evidenced by the pink slip establishing ownership.
Vehicle repossession is a form of creditor self-help. Self-help is highly disfavored under the law. However, repossession of a vehicle is one of the few types of self-help that is still permitted under state law.
Most states require that when repossessing a vehicle, no damage is done to the debtor’s property and that the seizure must be done peacefully. Most laws prohibit threats or the use of physical force against the debtor unless it is in self-defense.
