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Repossession Laws in Illinois

In Illinois, if a consumer is in a loan agreement with a creditor and they miss out on paying their scheduled payments, the creditor can seize the consumer’s vehicle in a process known as repossession. Once a consumer is in default, if the creditor has a valid security interest in the vehicle, they are able to repossess the vehicle from the consumer. However, the creditor must follow Illinois law regarding repossession and the law in Illinois regarding the repossession process provides the consumer with rights as well.

Is breach of the peace illegal in Illinois?

Yes. Repossession companies in Illinois have to conduct repossessions without breaching the peace. A breach of the peace will cause a repossession to be unlawful since it is considered to be a criminal offense. As a result of the law regarding a breach of the peace, there are many actions that a repossession company cannot do during a repossession. These include (but are not limited to) being violent, threatening to use force, misleading the consumer about the purpose of the repossession, and using police intervention to intimidate them without having a warrant. When repossessing a consumer’s vehicle, the creditor is allowed to take a vehicle from a public street or open area but they cannot break into private property to do so. They cannot force their way into a locked garage or gated area. The consumer has the right to object to the actions of the repossession company and to ask them to leave the consumer’s property. If they do so, the company should act in accordance with the individual’s requests since they can risk breaching the peace if they continue with the repossession. Due to this, repossession companies often try to conduct a repossession at night since there is a greater chance that the property owner will be asleep and will not be able to object to the repossession. However, if the company damaged private property in any way during the nighttime repossession, a breach of the peace may still have occurred.

Is a pre-repossession notice required to be sent to a consumer?

No. In Illinois, creditors are allowed to conduct a repossession without sending a pre-repossession notice to the consumer. However, the creditor must make sure that they have a valid security interest in the vehicle being repossessed and that the consumer is in default.

What can a consumer do after repossession has occurred?

After a consumer’s vehicle has been repossessed, a creditor must still follow a set of rules for the remaining steps of the process.

If a consumer left personal property inside of the vehicle, the repossession company should create an inventory of their items and they should give the consumer a period of 45 days to redeem them. They are not allowed to keep or sell the consumer’s property and are required to provide the consumer with the vehicle’s location so that they can reclaim their items.

If the consumer already paid off more than 30 percent of the total loan amount prior to the repossession, the creditor must send them a notice of their right to redeem the vehicle. This notice has to be sent to the consumer within 3 days of the repossession and it will provide them with a period of 21 days to pay off their balance. The consumer will be able to redeem their vehicle and reinstate their pre-default rights if they can catch up on their outstanding payments and pay for any late fees or costs associated with the repossession. However, for the duration of the consumer’s contract, they will only be able to use this method of redemption once. If the individual already used the previously mentioned method or if they did not pay off at least 30 percent of their loan, they can redeem the vehicle at any time before its sale but only if they can pay the full amount that remains on the loan. This would include any accelerated payments, as well as reasonable expenses by the creditor.

If the consumer cannot provide the full payment, the creditor will have the opportunity to sell the vehicle. However, before they can do so, the creditor has to send the consumer a notice that informs them of their intention to apply for a title to the vehicle from the Secretary of State. This notice should be sent with an “Affidavit of Defense” form. If the consumer chooses to fill out this form and mail it to the creditor within 21 days, the creditor will not be able to receive the title or sell the vehicle. Instead, they may have to file a lawsuit or negotiate a settlement.

However, if the consumer does not fill out the affidavit and a sale is to occur, the creditor must send them a pre-sale notice that provides the consumer with the time, date, and location of the sale. The sale has to be commercially reasonable, which means that the creditor cannot sell the vehicle for a price that is significantly lower than its average market value. After the sale, the creditor should send the consumer a post-sale notice that tells them of the price that the vehicle sold for and any amount that remains on their balance. If the sale of the vehicle brought in more money than was needed to pay for the consumer’s debt, they are entitled to keep the excess amount. However, if the sale funds were insufficient, the consumer may be held liable for owing the debt that remains, which is known as the deficiency balance.

What happens if a consumer’s vehicle was wrongly repossessed?

The consumer’s vehicle may have been wrongfully repossessed by the creditor if they did not send the consumer a notice of redemption, notice of the application for a title, or a pre- or post-sale notice. If the repossession was unlawful, the consumer may not have to pay for the deficiency balance. Additionally, the repossession company may have violated the Fair Debt Collection Practices Act (“FDCPA”) by breaching the peace during the repossession or repossessing the incorrect vehicle. The FDCPA is a federal law that provides consumers with rights against debt collectors who commit, amongst other things, unfair and deceptive acts and practices. If the repossession company violated this statute, then pursuant to the FDCPA, they could have to pay the consumer compensation of up to $1,000 in statutory damages and any fees or costs.

Where can a consumer look for help or for answers to their questions?

In the state that a consumer resides in, a consumer protection agency, the Office of the Attorney General, and/or a consumer protection attorney who is licensed in a consumer’s respective state can help a consumer receive assistance and/or determine the answers to their questions in regard to the aforementioned laws. The Consumer Financial Protection Bureau can also provide help to consumers.