Also known as a notice of repossession, a repossession notice is a document issued by a lender to a debtor regarding the repossession of property pledged as collateral on a loan. Laws regarding the repossession process vary from one nation to another, and sometimes between jurisdictions within a particular nation. While a repossession notice is often issued prior to the actual seizure of the collateral, there are some jurisdictions that do not require this action, but may require that lenders prepare and forward to the debtor what is known as a post repossession notification.
When issued in advance, a repossession notice normally informs a debtor that failure to maintain payments on the debt has led to the decision to repossess the property associated with the loan. Typically, lenders will attempt to work with debtors before taking this serious step, usually providing ample time for debtors to respond in kind and demonstrate some indication of bringing the debt current. Once those efforts fail, the notice is sent and recovery procedures commence. For example, if the debtor pledged a vehicle as collateral on a car loan and fails to make the monthly installment payments, the lender may declare the loan to be in default. At that point, steps to recover the pledged vehicle will begin, usually with the aid of repossession professionals.
Some jurisdictions do not require lenders to issue a repossession notice in advance. The assumption is that the debtor is aware of the debt and the fact that he or she is not complying with the terms of the loan agreement, and has failed to respond to any of the attempts of the lender to collect the past due amount. Once the amount of time required by local laws to allow the debtor to settle the debt has passed, the property or asset is repossessed at once.
A post-repossession notice is issued after the property has been collected and delivered into the hands of the lender. The content of this type of notice usually confirms that the repossession has taken place and offers the debtor terms for reclaiming the repossessed property. This typically includes paying off the amount that is in arrears, plus covering any costs associated with the repossession effort. Should the debtor fail to honor the terms in the post-repossession notice, the lender is free to sell the asset, recoup whatever amount possible from that sale, and then sue the debtor for any costs or expenses that remain outstanding.