Like foreclosure, repossession is a lender's right to take the collateral such as an automobile, furniture or an appliance in satisfaction of the debt it secures. We will focus on automobiles, but it works similarly in the case of other personal property pledged as collateral. Unlike foreclosure, repossession does not require a court proceeding. All the lender needs to do is to have the vehicle towed by a repo company. The owner of the vehicle has the right to get it back by either redeeming it or paying the full balance owed before auction, depending on the situation.

In Illinois, as in most states, the owner of a repossessed vehicle continues to have an interest in it until it is sold at auction. Such interest is protected upon filing of bankruptcy, meaning the lender cannot sell the car without the bankruptcy court's permission. However, the owner may or may not be able to get the car back eventually, again, depending on the situation.

Saving a vehicle from repossession is a common reason to file a Chapter 13 bankruptcy, because the bankruptcy law often allows modification of the loan contract, which may help make the car more affordable.