repossess

Repossess, or repossession, is the act by a lender to reclaim property that was pledged as collateral for a loan or lease when the borrower defaults. It is common in consumer finance, especially for motor vehicles; it can also apply to equipment, boats, and other tangible assets. Repossession is distinct from foreclosure, which generally refers to real estate.

Legal framework varies by jurisdiction. In many places, lenders may reclaim collateral through a self-help process without a court order, provided they do not breach the peace. In others, court intervention is required. In the United States, Article 9 of the Uniform Commercial Code governs secured transactions and provides guidelines for repossession, including notices, timelines, and the handling of proceeds. Laws also address debtor protections and limits on charges.

Process typically begins after a borrower misses payments and the loan enters default under the contract. The lender or a repossession agent may locate and take possession of the collateral, often at a location accessible to the borrower. After repossession, the asset is usually sold at auction or by private sale. Proceeds first cover the outstanding loan balance and repossession costs; if the sale does not satisfy the debt, a deficiency balance may remain and, in some jurisdictions, may be pursued as a deficiency judgment.

Debtor rights and consequences vary. Some contracts allow reinstatement by paying overdue amounts or redeeming the asset before sale. Repossession can affect credit scores and future access to credit. Debtors may dispute improper repossession under consumer protection laws, and some jurisdictions regulate associated fees and the sale process.