The debt in question was not a secured loan. The debt collectors are seizing cars that are NOT in lien to the debt being collected.
The full article notes that one practice they are stopping is seizing cars with existing liens to some other person, i.e. the car was already security for a loan from somebody else. They were also seizing cars from folks who had started bankruptcy, when the assets should be protected for fair distribution to all creditors.
The relief is being granted to those whose trouble is from medical or dental bills they have not paid.
The debt collectors are unscrupulous as they manage to get a judgement and start collection before the target is notified that there is a proceeding against them.
If it's like some spots NJ, they probably try to sieze cars worth way more than the loan, and then arrange to sell them at just enough (or less) than the amount of the loan to their partners. Thus, the loan gets paid, they get to resell the car at more profit. If they really underbid the car, they still have part of the original loan to collect on. This part of the process is only hinted at by the article, when it notes that they are trying to get more bidders at the car auctions.
There is no free lunch - if hospitals and doctors do not get paid, emergency rooms will close. If the debtors set up a payment plan with the hospital on their debt, I don't think the hospital would have their car sold to pay their debt. What likely happened here is that the debtors went to the hospital emergency room for "free" medical care, thinking that the hospital couldn't collect - ignored the bills - and then their car got towed and sold. How else can you make illegals and deadbeats pay when they work under the table? I'm with the doctors on this one - I pay for my medical insurance, why should my rates increase because deadbeats won't pay and they don't want their cars sold at auction?