{"id":4459,"date":"2017-02-15T14:17:27","date_gmt":"2017-02-15T19:17:27","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-finances\/right-of-repossession-basics.html"},"modified":"2024-06-06T04:19:16","modified_gmt":"2024-06-06T09:19:16","slug":"right-of-repossession-basics","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-finances\/right-of-repossession-basics.html","title":{"rendered":"Right of Repossession Basics"},"content":{"rendered":"\n
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Right of Repossession Basics<\/h1>\n
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Perhaps you\u2019ve heard of the ubiquitous repossession man or \u201crepo man,\u201d a shadowy figure who creeps up to your house in the middle of the night to take your back your shiny new sports car because you\u2019ve defaulted on your car loan. Sounds like something out of a bad network television show, but in reality, creditors do have rights of repossession in certain circumstances and they can send a person out to take possession of any items a consumer or business doesn\u2019t pay for as agreed upon in the contract.<\/p>\n

Here you will learn about the basics of creditor\u2019s rights of repossession in secured debts<\/a> including what repossession is, what property may subject to repossession, and much more.<\/p>\n

Definition of Repossession<\/h2>\n

So what exactly is repossession and how does it happen? Repossession is a process wherein a creditor takes possession of specific property after the debtor defaults on a contract. As in the example above, a person buys a car and then doesn\u2019t pay for it as they agreed to in the contract. The right of repossession is created by contract and can exist in many different types of transactions.<\/p>\n

Note, creditors are allowed to repossess property in many circumstances because they are \u201csecured creditors,\u201d meaning the lenders have an ownership interest in the borrower’s property. These are typically car loans or home mortgages.<\/p>\n

How Repossession Works<\/h2>\n

A creditor can start the repossession<\/a> process almost immediately if the account goes into delinquency. At that point, a creditor contracts with a third-party service, the repossession person or business, to capture the property and sell it to satisfy the unpaid balance plus the costs of the sale and attorney’s fees.<\/p>\n

The most notable part to this process is that the creditor does not need a court order<\/b> to begin repossessing property. How can the creditor do this? Usually this is spelled out in the terms of the contract signed between the business and the buyer. Each state has different business laws<\/a> specifying how much, if any, notice has to be given to the consumer, so it is always good to check the laws in your state first. The same is true for leased vehicles or business equipment \u2013 miss a payment and the property can be seized right away without a court order.<\/p>\n

Breach of the Peace<\/h2>\n

While creditors have broad rights of repossession, they can\u2019t use the repo man to \u201cbreach the peace\u201d or break the law to retrieve on secured debts. Breach of the peace can mean a variety of things, so it is important to look to state laws to understand the meaning. But generally it means the repossessor can\u2019t come onto your private property<\/i><\/a> to take the property such as an enclosed garage, or into a fenced or locked area, without permission from the legal owner of the building or locked area.<\/p>\n

However, that doesn\u2019t mean you can hide the property away in a location that would make it impossible for the repossesor to enter. In fact, in many states hiding or concealing the vehicle to deprieve it from the legal owner can be a crime. The repossesor can, however, take items, such a car or motorcycle, if it is located in an unsecured driveway, street, parking lot, and other publicly accessible areas at any time of day or night.<\/p>\n

Are Cars the Only Property Subject to Repossession?<\/h2>\n

No, in fact there are number of different types of items that can be repossessed by a creditor to satisfy the secured debt including:<\/p>\n