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Repossession
Repossession is generally used to refer to a
financial institution taking back an object that was either used as collateral
or rented or leased in a transaction. Note that repossession is a "self-help"
type of action in which the party having right of ownership of the property in
question takes the property back from the party having right of possession
without invoking court proceedings.
This is usually done in accordance with a
purchase contract or credit contract, in which the consumer agrees that the
seller (the "lien-holder") may repossess the object if the signers are past the
grace period (generally for prime lenders the critical number is 30 days late
making an installment payment but can vary based on how many payments have
already been made, the length of the business relationship, reason why past due,
etc.). Contracts that authorize repossession also usually specify additional
fines that the consumer must pay to the seller, ostensibly to cover the seller's
costs of the repossession and of depreciated value of the object, as the seller
is now in possession of a "used" object. In some places self-help repossession
is not permitted; the lien holder is required to go to court to obtain an order
of replevin. However, in some states, repossession is mandatory and suits
of replevin are not permitted.
If a lender finds itself in the situation of
needing to repossess property while the borrower attempts to avoid this, the
dealer may contract the work of repossession out to a repossession agent. Many
things can be repossessed, but most repossession agencies focus on auto
repossession.
The repo agent normally uses a tow truck or
pickup truck with a special towing attachment, but sometimes they pick the lock
or obtain the key from the car owner.
Usually the vehicle owner must be notified of a
repossession. The repossession agent will find the car and check the VIN to make
sure they have the right car. They will then hook up the car to the tow truck
and tow it away or pick the lock and drive it away.
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