What is a Repossession Order?

Malcolm Tatum

Also known as an order of repossession, a repossession order is a formal notice that the holder of a lien on a given piece of property is about to seize control of that property. This action usually results when the debtor does not honor the terms of repayment associated with some type of loan in which that property is held as collateral. In many jurisdictions, this formal notice of the impending repossession is a last ditch effort to induce the debtor to honor the terms of the loan agreement and pay off any amount that is in arrears.

A repossession crew can take a car from public property places, like parking lots.
A repossession crew can take a car from public property places, like parking lots.

It is important to note that lenders are not required by law to issue a repossession order in all jurisdictions. In some areas, a debtor is considered to be in default if even a single payment is late, and the lender has the right to seize control of the property immediately. When this is the case, there may be some limitations to this seizure action. For example, the lender cannot break into a locked garage in order to repossess a vehicle that is collateral on the loan, but does have the right to have the vehicle towed if it is found parked on the street or in a public parking lot.

Other jurisdictions require that a formal repossession order be granted through the legal system. Here, the lender notifies local authorities of the delinquency and the refusal of the debtor to work with the lender in bringing the account up to date. At that point, the local court system issues the formal repossession order and it is delivered to the debtor. The content of the document normally provides the debtor with a short window of time to voluntarily surrender the property to the lender, or pay additional costs associated with having the property seized by collection professionals.

Since laws regarding repossession vary from one jurisdiction to another, it is important for anyone who receives a repossession order to obtain legal counsel. This will make it easier to pursue any remedies that may be available, including taking legal action against the lender if he or she utilizes methods to repossess the property that are in violation of local laws. Ideally, the goal should be to avoid the issue of a repossession order altogether, and work with the lender if circumstances such as job loss, an extended illness, or some other unforeseeable event impairs the ability of the debtor to repay the loan according to terms. Many lenders would much rather work with debtors to resolve the issue amicably rather than have to go through the effort and expense of a repossession.

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