Recovery Industry Standards Definitions

January 31, 2025, by American Recovery Association, Allied Finance Adjusters, Eagle Group XX

Purpose

It is the purpose of this industry endeavor to create accepted standards and practices to eliminate unfair and non-compliant practices by lenders, forwarding entities, repossession agencies and repossession agents; to insure that those lenders, forwarding entities, repossession agencies and repossession agents who refrain from using unfair and non-compliant practices are not competitively disadvantaged; and to promote consistent industry standards and practices to protect consumers against abusive, unfair and non-compliant actions.

Definitions

Consumer means an individual who obtains (or has obtained) a financial product or service from a lender primarily for personal, family, or household purposes, and for which non-realty property has been pledged as collateral for the consumer’s performance of financial obligations therein.

Creditor/Lender means a financial institution, credit union, or other entity that extends credit to a consumer and holds a security interest in property pledged as collateral for the consumer’s performance of the financial obligations therein. The creditor/lender is responsible for maintaining its right to repossess collateral by self-help from the time of declaring a default on the financial obligation up to and throughout the process of self-help repossession by its retained Repossession Agency.

Repossession Agency: A business entity specializing in recovering collateral on behalf of creditors/lenders by self-help repossession. The agency is responsible for ensuring its compliance with federal, state, and local regulations while conducting repossession activities and should be vetted by one of the industry’s recognized national organizations’ objective and reasonable criteria for those compliance obligations.

Repossession Agent: An individual employed by a repossession agency who is trained and authorized to recover secured collateral by self-help repossession in accordance with applicable laws and industry standards. Agents must be licensed, where required, and adhere to annual continuing education, strict ethical and procedural guidelines and must be certified by a nationally recognized Professional Repossession Training Program.

Self-Help Repossession: The act of recovering, without action in the court system, collateral sold or leased on credit after the creditor/lender declares a default on the loan or lease. The act must meet the requirements of applicable statutes, rules and regulations and must be accomplished without a “breach of peace” (as that term is defined in applicable state law). The act begins when the Repossession Agent makes a physical attempt to take possession of the collateral and is complete when (i) the Repossession Agent gains control of the collateral by making physical entry into the collateral, moves the entire item of collateral, or connects the collateral to a towing apparatus, or (ii) abandons the attempt to recover the collateral. To the extent this definition conflicts with applicable law, that law controls.

Involuntary Repossession: The recovery of collateral by self-help means in compliance with federal, state and local laws by a Repossession Agency and which is not a “Voluntary Repossession”.

Voluntary Repossession: The recovery of collateral by self-help means, upon the surrender of the collateral by the consumer, which recovery is in compliance with federal, state, and local laws by a Repossession Agency, and when: (1) the consumer’s accurate contact information is provided; (2) contact with the consumer is authorized for the purpose of arranging an appointment for obtaining possession of the collateral; (3) the consumer accurately confirms the condition of the collateral in order for the Repossession Agency to prepare to take possession of the collateral; and (4) the consumer is cooperative and not cause for delay, has removed all personal effects from the collateral prior to the time of repossession, and provides keys or other items necessary for operation of collateral at the time of repossession.

Impound Repossession means when collateral is recovered by a Repossession Agency from a third-party facility, such as a tow yard or government impound lot, where the collateral has been held for legal or regulatory reasons unrelated to the repossession process. Impound Repossessions often arise when a vehicle is towed for parking violations, accidents or other traffic infractions.

Recovery Industry Standards Definitions