Repossession is the process of a bank seizing an asset that was used as collateral in a loan or one that is rented or leased under contract. Repossession may or may not involve a court, but it is usually pursued as an activity authorized in the original loan contract. Almost always, repossession is triggered by a default condition in the repayment schedule. In simple terms, if you don’t pay your automobile loan the bank is going to come and pick up the automobile.
Repossession is governed by many laws which are typically enacted on the state or local level; depending upon the jurisdiction involved, repossession may be commonly practiced. If the borrower attempts to avoid repossession, the creditor will typically contract the repossession work out to a company that specialized in repossession. Generally speaking, the creditor is responsible for any damages incurred through repossession activities.