Repossession Definitions

Common Repossession Terms and Definitions This is a list of common repossession terms and definitions. It is not meant to provide legal information regarding repossessions or legal guidance in any way. Please contact an attorney for answers to specific repossession questions and repossession scenarios.

Adjuster - Another term for the repossession agent in the field. Many repossession services incorporate the word adjuster into their company name, such as Carolina Adjusters, or Allied Adjusters.

Affidavit of Repossession - Once a vehicle is repossessed, the lien holder must sign a repossession affidavit. The lien holder is certifying that the vehicle has been repossessed. This allows the lien holder to sell the car without the owner's signature.

Breach of Peace - Repossessions are permitted under most state laws so long as the peace is not breached. Creating any disturbance while repossessing a vehicle is considered to be a breach of the peace.

Charge Off - Lenders can write a loan balance off of their taxes when a predetermined delinquency occurs on any given loan. Some lenders charge off delinquent loans more than 90 days delinquent. Other lenders will charge off the loan once it has become more than 180 days delinquent. Lenders prefer to have their collateral repossessed and sold prior to charging off the loan. This reduces the lender's charge off balance. Lenders gage their collectors performance by comparing the collectors delinquent loans against how much money the collector is charging off. Once a lender charges off a loan, the lender reports to the credit bureaus that the loan is rated at a 9.

Collateral - An asset or property that is pledged as security for a loan. Collateral can be anything from a bank account to a vehicle. When the debtor signs a security agreement with a lender he is giving the lender the right to repossess his collateral if the loan becomes delinquent.

Color of Law - The police cannot interfere in a civil matter, if they do it is considered " color of law". If two owners of a vehicle have a dispute over possession of their vehicle it would be illegal for a police officer to step into the dispute and decide which party should get possession over the vehicle, so long as the parties in dispute have not broken any laws. If the officer did step in and decide that one party should surrender the vehicle to the other party, the officers actions are termed to be color of law.

Condition Report - After the vehicle is repossessed, the repossessor will provide the lien holder a detailed report showing the condition of the vehicle. The lien holder uses this information to determine how much the repossessed vehicle should be sold for at auction.

Contingent Repossession - A repossession order that only pays the repossessor if and when he repossesses the collateral. A contingent repossession fee will be assessed by the repossessor based on a percentage of the collateral's value. Standard contingent repossession rates range from 10% to 25% of the repossessed vehicle's value.

Debtor - The person or persons that signed the promissory note and security agreement. Usually, this is the person who the vehicle is being repossessed from.

Deficiency Balance - After a vehicle is repossessed and sold at a repossession auction, the proceeds of the auction are applied to the loan balance. The remaining balance owed by the debtor is called the deficiency balance.

Door Knock - Also called "knock and demand" is the act of the repossession agent knocking on the debtor's door and demanding surrender of the collateral. Normally, the repossession agent will only door knock, once he is sure that the debtor lives there, and the collateral has not been seen.

Fair Debt Collection Practices Act - AKA, FDCPA is a federal body of law that sets rules on how third party collection agencies collect debts on behalf of others. Original lenders are not subject to the FDCPA. A repossession service becomes subject to the FDCPA if the repossession service is collecting or asking for payment on behalf of a creditor.

Field Visit - Lenders will request that a repossessor go to the debtors residence, take pictures of the collateral, and complete a condition report. Lenders use this as a tactic to get the debtor to realize that the collateral is about to be repossessed and that they should pay. This tactic normally backfires on the lender when the debtor ends up hiding the collateral since they lender tipped them off that the collateral was about to be repossessed. Many repossession services refuse to accept field visit assignments since the field visit only complicates the repossession assignment. Several lenders have lost court cases where the courts have determined that field visits are an illegal debt collection practice.

First Payment Default - Debtor has not made the first payment due on a loan. Usually an indication of fraud, or at least a debtor that never had any intentions of paying for the collateral. First payment defaults are normally a lenders number one priority.

Flat Bed Truck - Also called a roll back truck. Flat bed trucks are used to repossess many four wheel drive vehicles and SUV's that cannot be towed by a regular wheel lift tow truck.

Flat Rate Repossession - A repossession order that pays the repossessor whether or not the repossessor actually repossesses the collateral.

GPS Unit - A GPS tracking device is put on many vehicles financed by sub prime auto finance lenders. The tracking device can be used by the repossessor to find where the collateral is at.

GLB Compliant - Gramm Leach Bliley Act is a federal body of law that requires banks to protect their consumers personal information. GLB Compliant is simply stating that the repossession service has trained all of their employees as to the Gramm Leach Bliley act requirements and that all of the repossession service employees will adhere to the law.

Hold Harmless Agreement - Also called a repo order, this document is for the lien holder or owner to authorize the repossessor to repossess and impound their vehicle. The vehicle owner or lien holder is also agreeing to indemnify and hold the repossessor harmless in the event the repossession was improperly ordered.

Involuntary Repossession - A repossession where the lien holder has demanded surrender of the collateral and the debtor has refused to turn in the collateral at the appointed place and time.

Key Charge - Charge for the repossessor to make you keys for the repossessed vehicle. Many keys can be made for less than $50. There are some luxury vehicle high security keys than can cost as much as $250.

Key Code - An alpha numeric code that allows a locksmith to make a key for a particular car for a repossessor.

Lien - An encumbrance on property.

Lien Holder - The lender that holds the lien on the collateral. This is normally the repossession service's customer or the entity that the debtor is supposed to be sending their payments to.

Lock Out Fee - The lockout fee is paid to the repossessor to open the vehicle passenger compartment and trunk. The repossessor is responsible for all of the debtor's personal property in the repossessed vehicle. The vehicle must be opened to inventory the debtor's personal property.

Low Boy Trailer - A type of trailer used to repossess heavy construction equipment.

Personal Property - Anything the debtor leaves in the vehicle that is not attached to the vehicle is considered personal property. A stereo that the debtor installed in the repossessed car is not considered personal property since it is attached to the collateral, it is considered to be part of the collateral and may not be removed.

Phone Break - Is the act of taking a phone number and determining the address where the phone physically located.

Pretext Call - Any phone call where the caller misrepresents his identity and the true reason for the call. Pretext calls are usually made by skip tracers attempting to locate the debtor and effect repossession. The Telephone Records and Privacy Protection Act of 2006 makes any sort of pretext call to a consumer or telephone company illegal.

Private Party Repossession - Any repossession falling outside of the standard bank and debtor relationship.

Promissory Note - This is the contract that the debtor promised to pay the lender the amount owed plus interest. The debtor also agrees to give a security interest in the collateral to the lien holder.

Redemption Notice - Once the vehicle is repossessed, the lender must send the debtor notice that the collateral has been repossessed, that the lender intends to liquidate the collateral at public auction, that the proceeds of the auction will be applied to the debtors loan balance, that the debtor will be held financially liable for the remaining balance, and that the debtor may prevent all of this by paying off the entire loan.

Replevin - A court ordered repossession, usually executed by the sheriff or bailiff or the court. For more information on replevin actions, check our repossession service news article, Replevin Actions.

Repo - Slang or abbreviation for repossession.

Repo Man - The tow truck driver that actually performs the repossession. Also a 1984 movie starring Emilio Estevez.

Repossessor - The agency the lender hires to repossess their collateral.

Repossession - The act of seizing the collateral from the debtor or third party as a result of a defaulted promissory note or lease agreement.

Repossession Agent - The person in the field that performs the act of repossession.

Right to Cure - Some states require that a right to cure notice be sent to the debtor prior to the vehicle repossession. The lender is required to notify the debtor that the loan is delinquent, the past due amount, a demand that the past due amount be paid in a reasonable time period, and that if the loan deficiency is not cured, the collateral may be subject to repossession.

Security Agreement - Signed by the debtor, grants the lien holder a security interest in the collateral and the right to repossess the collateral if the loan terms are not met or if the lender feels that the collateral is in jeopardy.

Self Help Repossession - Any repossession that occurs without a court order is a self help repossession. Most states have adopted the Uniform Commercial Code as a template for their state laws regarding repossession. The Uniform Commercial Code states that "Self help repossession is permitted, so long as the peace is not breached. Please check your state laws regarding repossessor licensing and repossession laws.

Skip Tracing - The process of locating the collateral in a situation where it may be repossessed. This includes extensive internet and propriety database searches. Good skip tracers have a vast network of contacts and can search for a vehicle in many unique ways. Skip tracing would also include the process of checking various addresses for the collateral, or waiting for garage doors to open and see if the collateral to be repossessed is in the garage.

Slim Jim - A tool used by a repossessor to open a car door without a key. Spotter - A skip tracer that attempts to spot collateral to be repossessed. Once the spotter sees a car on his repo list, he dispatches a tow truck to repossess the collateral. Storage Rate - The daily fee the repossession service charges for vehicles in their impound.

Straw Purchase - A vehicle purchase where the purchaser of the vehicle is not the intended user or driver of the vehicle. A standard situation where straw purchases occur when the person that intends to

Social Security Number - Is a 9 digit number issued by the internal revenue service to distinctly identify individuals. The first 3 digits represent what state the individual lived in at the time the social security number was issued. The fourth and fifth digits represent what year the social security number was issued. The last four digits are sequential based on the order the were issued.

Sub Lease Scam - Web sites offer to sub lease your vehicle to a third party for profit. Once the bad guys have your car, they do not pay you as they agreed. They keep your car, and you still have to pay your bank. Law enforcement will generally not get involved as it is a civil matter.

Title - Official document issued by the state showing the vehicle VIN number, the owner's name and address, and the lien holder's name and address.

UCC1 Filing - Uniform Commercial Code Form 1, or UCC1 is a way to put a lien on something that does not have a title. This would include industrial equipment, and large construction machinery.

VIN Number - Abbreviation for Vehicle Identification Number. Since 1981 all automobiles in sold in the United States are required to have a 17 digit alpha numeric code stamped on the vehicle frame, engine block, drivers door jam, and on the dashboard. Each digit in the VIN represents various pieces of information such as, vehicle manufacturer, make, model, engine size, year manufactured, and serial number.


What's your opinion?