"Repossession," or "repo," is a term used to describe a creditor taking back property from a debtor who has defaulted on a secured property loan. In general, this term is only applied to actual physical property, such as land, buildings, or vehicles, and a creditor can only repossess someone's property if he holds a lien on that particular piece of property. Under most circumstances, a personal loan given by a friend or family member does not entitle the lender to take the borrower's vehicle if the borrower defaults.
Auto Lenders
Auto lenders, or automobile financing companies, provide loans to assist people in purchasing new or used vehicles. Auto loan agreements usually state that if the buyer defaults on the payments, the lender has the right to take the vehicle from the buyer without notice, and without taking the buyer to court. Auto lenders may contract a third party to repossess a vehicle. The repo agent is allowed to go on to the buyer's property to retrieve the vehicle, but cannot enter the buyer's home or garage without permission. Any repossession involving threats, violence or a "breach of the peace" against the buyer are unlawful.
Credit Card Companies
Credit card companies have many options available to help recover money a cardholder owes to them, but a credit card company cannot threaten to take someone's personal property, including a home, vehicle, furniture or electronics, as payment for a balance owed unless the credit card company sues the cardholder, is awarded a judgment by a court, and then files a legal lien against the cardholder's personal property. A credit card company cannot threaten to take someone's personal property without first pursuing the balance owed through the court system.
Collection Agencies
Some unscrupulous collection agencies will use harassment or threats to convince a debtor to find a way to pay the balance owed. Collection agencies are bound by the Fair Debt Collection Practices Act (FDCPA), and cannot use illegal methods to coerce someone into paying a debt. Unless a collection agency was hired by the original auto lender to collect a balance owed on a vehicle, threatening to repossess a debtor's car would be considered an unethical or illegal collection practice.
Individual or Personal Lenders
If an individual loans another person money to purchase a car, that individual may be considered a legal lien holder on that car, if there is a valid contract between the two people assigning that right to the individual lender. But if an individual makes a loan to another person --- such as a loan for living expenses --- without a contract designating something as collateral, that loan is unsecured, and does not entitle the lender to a lien on any of the debtor's personal property. So, if John loans Ann $500 to pay her rent after she loses her job, and Ann is unable to pay John back, John cannot threaten to take Ann's car unless John and Ann signed a contract stating the $500 was a secured loan, with Ann's car as collateral. If John takes Ann's car to repay himself for his loan without Ann's permission, Ann can charge John with auto theft.
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