What Is a Repossession Company? Your Rights Explained

Missing a car payment feels scary. You worry about the repo man showing up unannounced. Understanding the repossession process protects your rights and reduces your stress.

You have more control than you think. Repossession companies must follow strict laws. Knowing these rules helps you take action before losing your vehicle.

What Repossession Companies Do

A repossession company helps lenders recover collateral from borrowers. They employ repossession agents to retrieve vehicles and other secured assets. Auto recovery makes up most of their business.

Lenders hire these companies when borrowers default on secured loans. Your car loan is a secured loan. The vehicle serves as collateral backing the loan. If you stop paying, the lender can take it back.

Your state determines what happens before repossession. Some states require lenders to send a notice of default first. Others allow immediate repossession after you miss payments. The rules vary widely across the country.

If you’re facing repossession, our partner Cambridge Credit Counseling can help you create a payment plan that stops the process.

Who Are Repo Agents?

Repo agents are employees of repossession companies. People often call them repo men. They don’t need college degrees to do this work.

Agents must know state repossession laws inside and out. They need valid commercial vehicle licenses since they drive tow trucks. Some companies own their trucks. Others partner with local towing services for vehicle recovery.

How Repo Companies Find Your Car

Repo agents can’t repossess what they can’t find. Lenders provide your home and work addresses to start. Agents check these locations first when hunting for vehicles.

Modern technology makes hiding vehicles nearly impossible. Most newer cars have GPS transponders built in. Repossession companies use these tracking systems to locate vehicles anywhere.

Beyond GPS, repo companies use several tracking methods. They review public records and credit reports. License plate recognition networks scan roads constantly. These systems alert repo companies when cameras spot your plates.

When Courts Get Involved

Sometimes borrowers hide vehicles in locked garages or at friends’ houses. Agents can’t break into locked buildings without permission. Instead, they request a replevin order from the court.

A replevin order legally requires you to return the vehicle. Ignoring this court order leads to serious consequences. You face civil penalties and possible criminal charges for non-compliance.

Legal Limits on Repo Agents

Repossession agents must follow strict rules when seizing property. They cannot breach the peace during any repossession attempt. Our partner Solo can help if a repo company violates your rights.

Breaching the peace includes several prohibited actions:

• Entering locked buildings without your permission
• Using physical force or cutting locks
• Making threats or using violence
• Creating public disturbances during repossession

Repo agents can enter unlocked or open garages legally. They can take your car from your driveway at night. No permission is needed if the location is accessible.

Skip Tracing and Vehicle Location

Skip tracing helps companies find borrowers who disappear. Repo companies review your public records thoroughly. They check credit reports for new addresses. They monitor address changes through postal services.

Digital Recognition Networks scan license plates continuously. Cameras mounted on tow trucks and police vehicles feed data. The system alerts repo companies when it spots your vehicle.

You cannot easily hide from modern tracking technology. Fighting repossession through avoidance rarely works long-term.

Your Rights During Repossession

You have legal protections even when facing repossession. Agents must respect your personal property inside the vehicle. They should return your belongings after seizing the car.

Some states require advance notice before repossession. Others mandate opportunities to catch up on payments. Check your state’s specific laws for protection details.

You can redeem your vehicle after repossession in most states. Redemption requires paying the full loan balance plus fees. The timeframe for redemption varies by location.

Stopping Repossession Before It Happens

Prevention beats fighting repossession after the fact. Contact your lender immediately when you miss a payment. Many lenders offer hardship programs or payment extensions.

Refinancing your auto loan might lower your monthly payment. Selling the vehicle yourself prevents repossession marks on your credit. You’ll likely get more money than the lender would.

Bankruptcy stops repossession through automatic stay protection. Chapter 13 bankruptcy lets you catch up on missed payments. You keep your car while reorganizing your debts.

What Happens After Repossession

Lenders sell repossessed vehicles at auction quickly. They apply sale proceeds to your outstanding loan balance. You remain responsible for any deficiency balance after the sale.

Deficiency balances occur when sale proceeds don’t cover your debt. The lender can sue you for this remaining amount. Wage garnishment may follow a deficiency judgment.

Repossession damages your credit score significantly. The mark stays on your credit report for seven years. Future car loans become harder to obtain and more expensive.

You have rights even after repossession. Lenders must notify you about the sale. They must sell the vehicle in a commercially reasonable manner. Improper sale procedures give you grounds to challenge deficiency claims.