Repossessions Rise as Recession Wears On

Jan. 23 -- Last June, Carmella Walker woke up at around 3:30 in the morning, looked out her front window and glanced at her car sitting outside.

When she woke up again at 7 a.m., the car was gone.

But it wasn't a thief that took Walker's '98 Dodge Neon. The repo man had paid her a visit during the night.

After losing her job and getting behind on her car payments for three months, the finance company that provided her car loan decided to repossess her automobile in the middle of the night — a time repo experts say is the best way to insure a peaceful repossession.

Walker is not alone. Automobile repossessions by banks have been increasing steadily since the first quarter of 2001, according to the American Bankers Association. In the third quarter of 2002, 1.29 of every 1,000 bank-originated car loans ended up in repossession — an increase of almost 60 percent from the first quarter of 2001.

"We are seeing a lot of people that aren't able to pay," says Jack Barnes, a Tulsa, Okla., repossessor and executive director of the Baltimore-based National Finance Adjusters Association. "We're also seeing the lenders being more lenient than they were a year or two ago. Everybody sort of feels like times are tough and we're all in this together."

Horses to Helicopters

Although recent data shows that consumers are starting to hunker down and pay off their bills, as the recession wears on, consumer debt has remained a problem.

Consumer's debt loads fell by an unexpected $2.2 billion in November, the biggest drop since October 1991. Still, Americans as a whole continue their love affair with debt — taking on around $147 billion in new debt since the beginning of 2001, according to the latest data from the Federal Reserve.

Barnes, who has been working in the repo business for 40 years, says his business is primarily in automobiles, but he says he's seen some other items getting repossessed as well.

"Our slogan is, 'We repossess everything from horses to helicopters,'" says Barnes, who admits he hasn't had to repossess a horse for some time now.