Repossession Laws in Illinois

For many people, it’s difficult to get by without a car, and losing access to your car can be stressful. If you’re having financial problems and you aren’t able to pay your auto loan, you risk losing your car through repossession. In a car repossession, your lender takes back your car because you’ve missed one or more of your monthly car loan payments. 

In this article, we’ll explain how vehicle repossession laws work in the state of Illinois and how you can use them to protect your rights as a borrower.

How Many Payments Can I Miss Without Risking a Repossession in Illinois? 

An auto loan is a kind of secured debt. The car “secures” the loan by acting as collateral. It also gives the lender a security interest in the loan. This means if you default on the loan, the lender can seize your car and sell it to recoup their losses. Under the Illinois vehicle code, lenders can repossess your car if you miss even one car payment. 

In some cases, your car loan agreement will give you more time. Review your loan documents to see how many payments you can miss before you risk repossession or if you have a grace period to make your payment. A grace period gives you a few days to make your payments after the due date without the payment being considered late. 

Will I Be Notified Before the Repossession? How?

Under Illinois law, the lender doesn’t need to notify you before they seize your car. Once the creditor takes your car, they have to notify you within three days by mailing you a written notice to explain that your car has been repossessed. The notice will also explain your options for getting your car back. There are two main options based on how much you’ve paid on the loan:

• If you’ve paid at least 30% of your loan at the time of repossession, you’ll get a notice of redemption. This notice says that if you can make the missed payments and pay the cost of repossession within 21 days, you can get the car back. 

• If you’ve paid less than 30% of the loan, you have an opportunity to purchase the car before the lender sells it. To do this, you must be able to pay the loan in full, along with the repo fees. 

You’ll have an additional 21 days to send an answer to the lender explaining why your car shouldn’t be repossessed. The lender can disregard your answer if they disagree.

How Can I Prevent a Repossession?

It’s best to check your auto loan contract to see if it gives you more leeway than Illinois law for repossession. Your lender may let you miss more than one payment or give you a grace period for late payments.

After the lender seizes your car, you can still get the car back if you can pay the loan off in full, along with the repo costs. Illinois law doesn’t specify when the car can be sold. But you’ll have 21 days to get the car back if you’ve paid 30% of your loan, and a further 21 days to file an answer even if you haven’t paid 30%. This means, in all, you get 21-42 days to come up with the money for the car. 

Regardless of where you are in terms of repossession, if you can’t make all of your loan payments, you should try to negotiate with your lender. They may agree to grant you an extension or to create an alternative payment plan. The lender is more likely to agree to this if you contact them before you miss monthly payments.

What Can Repo Companies in Illinois Do? 

Once you’re late on a monthly payment, the auto lender can seize your car. The creditor can do it, but they often hire a repo man to take your car. Illinois law doesn’t require the repo company to send you any notice before repossessing your car. They do have to abide by a few rules, including:

• The repo company is forbidden from entering your home or garage to seize your vehicle without your permission. But they can take the car from your property if it’s outside in the yard, driveway, or on the street. They can also take it from a public place like a parking lot.

• They can’t breach the peace. This means repo companies can’t use or threaten violence.

• Repo companies aren’t allowed to trick you. For example, they can give you a fake recall notice that tricks you into taking your automobile to a repair shop and then seize your car when you take it in. But if you voluntarily take a car in for a real repair, they can repossess your car at the shop.

If a repo company engages in any of these actions, you should reach out to an attorney for legal advice on how to assert a claim against the repo company and lender. Also keep in mind that just as repo companies aren’t allowed to breach the peace, you can’t either. You aren’t allowed to physically prevent the repo company from taking your car, and you can’t threaten violence to prevent the repossession.

Be alert for any potential scams involving the repossession of vehicles. If your car is seized and you’re up to date on payments, reach out to the lender. If you’re behind on payments and you don’t receive notice within three days of your car being seized, reach out to the lender. Illinois requires repo agents to have a license. So you should ask the person repossessing your car for proof of their license.

What About the Personal Property in My Car? 

If you’re at risk for repossession or you know it will occur, take your personal items from the car. Then you won’t have to deal with the hassle of retrieving your belongings. If the repo company seizes your car with your items in it, the notice that they send after should tell you how to get your personal property. The repo company must give you an appointment for you to pick up your property. Illinois law doesn’t specify how long they have to keep your property. If the repo company isn’t letting you pick up the items, reach out to your lender.

What Happens After a Repossession in Illinois? 

After your lender takes possession of the vehicle, it will be sold at a public auction. The notice that you receive after your car is repossessed will give you the details of the auction. You have a right to purchase the car up until the auction. 

If someone purchases the car for less than what you owe you have to pay the balance that remains after the sale. This balance is known as the deficiency balance. If your loan is upside-down, which means you owe more than the car is worth, you’re likely to have a high deficiency balance.

The deficiency balance includes what’s left on the loan and the costs of repossession (including lender’s fees, storage, towing, etc). To calculate the deficiency, subtract the amount the car sold for at auction from the total you owe (the loan balance, plus repo fees). So for example, if you owe $14,000 on the loan, the repossession cost $1,000, and your car is auctioned for $12,000, the deficiency balance will be $3,000. That’s $15,000 ($14,000 + $1,000)  minus $12,000. 

The lender is required to sell the vehicle in a commercially reasonable manner. This means the lender must properly advertise the sale for the repossessed vehicle and hold a fair auction. If the lender does this but only a few people come and make low bids on the car, then you’ll likely be responsible for the full deficiency balance. If the lender’s sale isn’t commercially reasonable, you may not be responsible for the whole deficiency balance. If the lender sues you to get a court order to collect the deficiency balance, you can raise this as a dense in the lawsuit. That’s also true if the vehicle was improperly repossessed.

Do I Still Owe After a Repossession in Illinois? 

You’ll likely have to pay money after the lender sells the car. You’re responsible for what’s left on the loan after the sale, along with any associated costs in the repossession process. You can minimize these costs by avoiding the repossession altogether and voluntarily surrendering your car to the lender.

In a voluntary repossession, you give your car back to the lender after you default on the loan but before the vehicle is repossessed. This doesn’t mean you won’t have to pay a deficiency balance, but it does mean you’ll pay considerably less in extra fees since the lender won’t have to hire a repo company.

Can I Get My Car Back After a Repossession in Illinois? 

You can purchase your car until it’s sold at auction. If you’ve paid at least 30% of your loan when the car is seized, you have 21 days from the date of repossession to pay back the missed payments. If you haven’t paid 30% of your loan or you don’t make the past payments in the 21 day period, you’ll have 21 days to pay off the loan in full to get your car.

Where Can I Find More Information About Repossession Laws in Illinois? 

• Illinois Legal Aid Online provides information on car repossession and helps clients deal with wrongful repossessions.

• Illinois Code on Repossession outlines what regulations repo companies must follow in the state of Illinois.

• The Lawyers Trust Fund of Illinois provides legal aid and can help represent you in repossession cases.

• The COVID-19 Consumer Resource Center has a list of which major auto lenders have resources for borrowers who are suffering from COVID-19 financial hardship.