Repossession with Clean Title

Repossession with a clean title happens more often than expected. It usually occurs when a previous owner of the vehicle allows a secured party to place a lien on the vehicle, the vehicle is sold/auctioned in manner that clears the title, but the lender fails to update their system. Then the old lender has the vehicle repo’ed even though they no longer have a right to do so.

Repossession is essentially when a lender takes back an asset that was used as collateral for a loan. When someone borrows money from a financial institution, the loan is secured by collateral such as a car or property. If the consumer us unable to keep up with payments, the lender can take possession of the collateral and repossess it in order to recoup their losses as long as they valid security interest/lien. The problem with clean title repossessions is the lack of a security interest in the vehicle. In these cases, the only remedy is to pursue the consumer that breached the agreement instead of taking the vehicle.

Wrongful repossessions are an unwelcome reality for some people with clean and clear titles — but that doesn’t mean consumers have no recourse when this happens. There are several state and federal laws that prohibit these actions and allow wrong consumers to take legal action.