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Everything You Need to Know about Repossession Laws in Illinois

Posted in: Repossessions

Repossession can be devastating and overwhelming, especially when repossession agents repossess your vehicle suddenly without notifying you, as sometimes happens in Illinois.

Have you fallen behind on auto loan payments and are facing vehicle repossession? If so, continue reading this blog post. It discusses everything you need to know about repossession laws in Illinois, including your rights and options available to navigate this financially stressful situation.

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What Is Repossession, and When Can It Occur?

Repossession is a process initiated by your lender when you fail to make your loan installment payments. To recover the money you owe, they take possession of the collateral property that you used as security to obtain the loan. In the case of auto loans, it’s your car or motorcycle that serves as collateral.

In Illinois, the lender can repossess your vehicle only if you miss one installment payment on your auto loan.

Understanding Illinois Repossession Laws

Notice of Repossession

Illinois laws do not require creditors to send you a notice of repossession before taking possession of your vehicle. A licensed repossession agency can repossess your vehicle anytime without notifying you after you fail to make a loan payment.

Breach of Peace

Creditors cannot breach the peace while repossessing your vehicle. Breaking the breach of peace entails the following:

  • Breaking into your locked garage or home for car repossession.
  • Using physical force while repossessing your vehicle, such as removing you from your car.
  • Use of threats or violence, such as harming you or your family members or causing damage to your property.

That is why repossession agents frequently repossess vehicles from public spaces.

A Chance to Recover the Vehicle

Illinois vehicle code requires creditors to provide a chance for debtors to recover their repossessed vehicle before selling or disposing of it. Your chance of recovering your vehicle varies depending on how much you have already paid on loan:

  • The creditor must provide you with 21 days to redeem your vehicle and repay the missed installment payment along with repo fees if you have already paid at least 30% of the total auto loan amount.
  • If you have not paid at least 30% of the total loan amount, you can still recover your car but must pay the entire loan balance within 21 days. Remember, this option is available only once in a lifetime.

Furthermore, Illinois law mandates creditors to return the personal property they found in your car.

A Court Hearing is Unnecessary

There is no need for court interference in the repossession process in Illinois. In other words, the creditor does not need a court order or need to go through any court proceedings before repossessing your vehicle.

As per the Uniform Commercial Code, the creditor retains a security interest in your vehicle until you pay the loan amount, so they can repossess your car anytime after you default on your loan.

Judges Hammer

What Are Your Rights During a Repossession in Illinois?

Right to Receive a Sale Notice

The creditor must send you a sale notice before selling your repossessed vehicle. This written notice must provide you with information relating to:

  • Date and time of sale.
  • Where the sale is going to occur.

The creditor cannot sell your vehicle without providing you notice of sale. If they do, you can take legal action against them and recover compensation for damages.

Furthermore, they must sell it in a commercially reasonable manner. It means they must sell your vehicle for a fair price. Therefore, the creditor should try to sell the repossessed assets as soon as possible so their cost does not depreciate.

Right to Have a Notice of Deficiency Balance if Necessary

Either of the following scenarios can occur when creditors sell your repossessed vehicle to recover the remaining balance of your loan:

  • The creditor recovers the total remaining balance of the loan or recovers more than the remaining balance on the loan.
  • The creditor recovers less than the remaining balance on the loan because your vehicle value has depreciated.

In the first scenario, which is rare, if the creditor is able to recover more than the remaining balance on the loan, they must provide you with the surplus amount.

In the second scenario, which is more common, the creditor needs to serve you the notice of deficiency balance to recover the remaining balance on your loan after the sale proceeds.

They cannot recover the remaining balance on your loan after the sale if they fail to provide you with a notice of deficiency balance.

What Are Your Options to Tackle Repossession in Illinois?

Challenge the Repossession

You can challenge the repossession in court and recover compensation or your vehicle if the repossession was unlawful because:

  • The creditor broke the breach of peace during repossession
  • The creditor violated the rights mentioned above or in your loan agreement

File for Bankruptcy

If you’re facing challenges meeting your loan installment payments, you can consider filing for bankruptcy. It can help you eliminate your debt and even get back your vehicle if you file it before the creditor sells it.

Bankruptcy provides you with two options to eliminate your debt:

  1. File for Chapter 13: It can help you repay a certain amount in exchange for your remaining car loan balance and other debts over 3 to 5 years.
  2. File for Chapter 7: It can wipe out your entire remaining car loan balance and almost all other debts.

Schedule a Free Consultation With Debtpros and Learn the Best Strategy to Handle Repossession

Wonais Law, LLC is an exclusive debt relief agency. We have been serving the people of Illinois to help them get through financially difficult times for over a decade. Our repossession attorneys understand the repossession laws and are familiar with creditors’ wrongful repossession process.

We can help you determine the best strategy to handle repossession and can hold the creditor accountable for their illegal actions.

Contact us today to schedule a free consultation if you cannot catch up with your deferred payment price agreement and find out the best course of action to handle the repossession.

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