Preventing a Repossession and Relief Available Lawyer Manual

Preventing a car from being repossessed

• Keep up with payments. Contrary to popular belief, a secured creditor can repossess a vehicle even if the debtor is behind on one payment. Other than basic necessities, secured interests should be a higher priority in paying bills than unsecured debts;
• Debtors also can negotiate a work-out plan with the creditor, but in doing so, the debtor should be mindful of possible increased costs, such as higher interest rates or amounts. It is also important to get any work-out agreement in writing. Sometimes, the creditor will agree to accept late payments and then repossess prior to the agreed date. This deceptive practice is called "gab and grab" and may violate the Illinois Consumer Fraud Act. 815 ILCS 505/;
• Debtors can try to sell the car before it gets repossessed, but typically, the debt is more than the car is worth, so the debtor will have to pay something above what they get from the sale in order to satisfy the lien;
• The debtor can offer to return the car to the creditor, but this should be done only if the debtor gets a written agreement saying that the debtor does not owe anything more on the debt, or some other favorable arrangement for the debtor;
• Repossessions in breach of the peace are unlawful, and thus, a debtor can prevent one by firmly objecting in person when the repo man shows up or by keeping the car in a locked garage or behind a locked gate. Note that repossession agents frequently will repossess a vehicle from the debtor’s place of work;
• Assuming a bankruptcy is otherwise warranted, the filing of a bankruptcy before the repossession triggers an automatic stay which prevents a creditor from taking action against property;
• Of course, the debtor can also try to hide the car, but this is often not very practical. Some debtors temporarily “trade” vehicles with close friends or relatives until they are able to negotiate a resolution with the auto dealer or finance company. No Illinois law prohibits the concealment of property under a lien. However, if the creditor cannot locate the car, it may file a detinue action to recover it.

Getting back personal property left in the car

The debtor should get back any personal property left in the car. Unless the creditor also had a security interest in the property inside the car, which is not likely, a repossession agent is required to:

1. Inventory the personal property, and
2. Give written notice of intent to dispose of the personal property after 45 days and the location where the property can be retrieved. 225 ILCS 422/110

The lender or its agent generally may not charge a fee to retrieve personal property, but if they demand a small fee (e.g., $25), it may be advisable to pay it to expeditiously get the property back. If the repossession agent refuses to return the property on demand of the debtor or the debtor's agent, which constitutes theft or conversion, the debtor has a claim against the lender for the value of the unreturned property. Fleming-Dudley v. Legal Investigations, Inc., 2007 WL 952026 (N.D. Ill. 2007). The request should be in writing and specify the items of property to be returned. If a repo is likely but hasn't happened yet, advise the client not to keep personal belongings in the car.

Getting a repossessed car back

In Illinois, there are two ways for consumers to redeem their cars:

• Method One: Reinstatement, the 30% Rule, 625 ILCS 5/3-114(f-7): Applies only to vehicles, and only where, at the time of repossession, the debtor has paid at least 30% of the deferred payment price or total of payments due (including the down payment and any trade-in in the 30%). The "deferred payment price" is similar to the TILA "total sale price" 815 ILCS 375/2.10. The total of payments due should be the same as the TILA "total of payments." If so, the debtor must be sent a notice which gives the debtor 21 days to redeem. The notice must be mailed to the debtor within 3 days after repossession. Consumers who have paid the minimum 30% can get their cars back and reinstate the sales or loan contract if they pay the overdue payments, late charges and repossession costs, and cure any other defaults. A debtor can redeem a vehicle with this method only once during the lifetime of the contract. Also, it is unclear if certain types of defaults, such as the use of the vehicle for illegal purposes, can be cured.
• Method Two: Redemption Under 810 ILCS 5/9-623(c)(2): Applies to all consumers. A debtor can redeem any repossessed property at any time before the creditor disposes of it. However, the debtor must give the full amount of the balance of the contract, including all accelerated payments, plus the repossession and storage charges. Debtors usually won’t be able to do this unless they take out another loan or ask a friend or relative to purchase the car, assuming its worth what is left on the loan.

Note: Effective January 1, 2024, if a licensed repossession agency believes that a vehicle used as collateral contains personal information, it must remove that information using an approved electronic method before releasing the vehicle. Personal information means any data linked to the vehicle's owner, driver, or passenger, collected and stored by the vehicle. It includes biometric data, contact information, addresses, phone numbers, digital subscriptions, and more.