What are my Repossession Rights?

Repossession is the act of seizing and reclaiming property or collateral for which loan payments are in default. Often, repossession rights are discussed in terms of automobiles that were purchased with loans, but other types of property may be repossessed as well. Repossession rights may vary from jurisdiction to jurisdiction and from lender to lender. In general, most places afford debtors the right to peaceful, non-violent repossessions and notification before a creditor sells repossessed property. Likewise, some jurisdictions have laws that require creditors to notify debtors if they've left personal items in the repossessed property and allow the debtors to claim them.

Many people believe a creditor must notify them before repossessing property, but this may not be true. In many places, loan contracts stipulate whether or not notice must be given. If you're in default on a loan, you may do well to review your loan contract again to learn about your repossession rights. In some cases, a creditor need not give any notice before attempting to repossess property. Once you've missed a loan payment, the lender may have the right to begin repossession proceedings immediately; many lenders do give debtors a reasonable amount of time to catch up, however.

Most jurisdictions also have laws concerning the manner in which a vehicle is repossessed. Typically, repossession attempts must be handled peacefully, without violence, and without causing damage to the debtor's property. For example, a repossession agent is usually prohibited from fighting with a debtor to get car keys. Likewise, he would usually be prohibited from pulling a debtor out of a car in order to repossess it. Additionally, damaging a garage in order to get to the vehicle would be another example of an illegal repossession tactic.

If your property has been repossessed, your repossession rights may include the right to notification before the creditor sells it or disposes of it. If you've had property repossessed, you may be given the chance to pay what you owe and take possession of it once more. In most cases, however, you'll have to pay all of what you owe, not part of it, and you may be charged extra fees to cover the amount your creditor lost in repossession fees and storage charges.

Often, property is repossessed with the debtor's personal items still in it. This is particularly true of car repossessions. In many jurisdictions, creditors are required to notify you that your items were in the property and turn them over to you at your request. A creditor may not be required to store your items indefinitely, however, so you may do well to make arrangements to retrieve your property soon after notification.