Most car purchase agreements include a provision that the car will be collateral for the purchase amount. This means that if you do not pay the agreed upon amount on time, the seller can repossess the car. Every state has it’s own laws that set out the procedure for repossessing property. Under Illinois law on car repossession, the seller may be able to take your car without prior notice and without getting a court order.
Secured Interest and Default
This is true if the seller has a secured interest in the car and if you are in default on your payments. A secured interest means that the there is a written agreement that says the seller has a secured interest in the car or that the seller can repossess the car if you do not pay the purchase price on time. A default is a failure to pay under the contract. If your written agreement says you will be in default if you are late on one payment, then being late will allow the seller to take the car.
The seller can send someone to break into the car and take it without telling you. The reposesssion agent can follow you and take the car from the street, a public garage or take it from your driveway in the middle of the night. The seller’s agent cannot break into a locked garage or take the car if you are there and telling the person not to take it. To take it when you are there and objecting would be a breach of the peace.
If the seller’s agent takes the car over your objection, you cannot try to forcibly stop him or her, but you should get witnesses, photographs or a video of the event to use later.
If you are unable to make your car payment, you can work out a different payment schedule with the seller; sell the car yourself; pay the loan, and get a cheaper car; return the car to the seller with the agreement that the seller will take the car in full or nearly full satisfaction of your loan; or, in some situations, file for bankruptcy. Filing for bankruptcy puts the repossession process on hold.
Getting Your Car Back
After the car has been repossessed in Illinois, the seller has to send you a notice if you have already paid at least 30 percent of your loan before your default. The notice must be sent within 3 days of the repossession and give you 21 days to redeem your car. If you pay the default amount, late fees and repossession fees within the 21 days you will get the car back and your loan agreement will be reinstated. If you have not paid 30 percent of the purchase price before your default, you can still get the car back by paying the full amount remaining on the loan any time before the seller resells the car.
Sale of Car After Repossession
The seller has to send a notice after a repossession saying that they will apply to the Illinois Secretary of State for title to the car, which will allow them to resell the car. If the car is resold, the seller will apply the amount from the resale to the repossession fees and resale cost and to the amount due on your loan. Any amount still due on your loan after that will be a deficiency and the seller can sue you for that amount. You can delay the resale of a car by listing defenses you have to the repossession within 21 days on the form the seller sends you.
If the repossession is done unlawfully, such as a situation where the car is taken over your objections, or repossessing when you were not actually in default, then the seller has to give the car back and pay you damages. The seller has to follow the procedures all the way through the repossession process, by giving proper notices, with required content and being accurate. If the seller makes a mistake this can be a defense to the repossession and any deficiency action.