Every city in Illinois has its own policy regarding impounds.

Because the impound did not have anything to do with criminal activity on your part, you stand a good chance of talking to the authorities and explaining the situation just as you did in your question, and getting leniency in your favor on this.

Much of the impounding going on nowadays involves drugs in the car, loud music being played, reckless driving, and other such seriousness. This is why I think you stand a good chance of reducing the impact of this unfortunate event, especially if you tell them you had no idea your nephew lacked a drivers license.

You should take care of the fee by seeing if they can reduce it down, or even eliminate it, so as to protect your credit record. By rights, your nephew is responsible for all this and should cover you completely. But assuming he can't, just make it known to the authorities that it's your credit you're worried about more than anything else.

They should be able to handle things in a manner so that a minimum of reporting and computerized records will be generated against you. For example, if they sell off your vehicle, this would take care of the fee, and therefore give them a reason to take the matter off the public records.

Every local police force I've known has a charitable organization for which contributions are sought. If you donate your car to such, this should settle the matter.