Repossession

Repossession is the action employed in the event of default of a loan secured by collateral. It can be initiated through “self-help” repossession, in other words, a non-judicial action allowed by contract and by law within most states, Judicial repossession, also known as “replevin” or “claim and delivery” is the manner in which a writ of possession is granted by a court that employs law enforcement to perform the task.

The security interest of the loan, also known as the collateral is usually secured by a lien on the title and the lender, or creditor, is known as the lienholder. Having a secured interest by a secured lien is necessary for the instigation of a repossession order. These orders are assigned either as voluntary, where the borrower surrenders the collateral, or chattel as the colloquial term. Involuntary repossessions are assigned in the event a lienholder is unable to get he borrower to surrender it or no other means of recovery are possible.

In the United States, self help repossession is the most common manner employed. In the early days of auto lending, the banks or lenders themselves would frequently perform these tasks as part of the collection process. Due to the liabilities and losses of life, lenders have long since abandoned this strategy and instead, now refer this dangerous activity to repossession companies, often referred to as Adjustment Bureaus or Recovery Agencies.

In days of old, repossessions were a more mechanical or forceful activity where repossessors gained entry to the vehicles and towed them away by chain, hot-wired the ignitions, picked the locks or forced over the ignition locks. Since the explosion of technological advances in automotive design, most repossessions are now performed with the use of tow truck.

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