I think this will answer what you're asking..
Items are automatically repaired when needed in game, and if you can't afford them they will become damaged. IIRC, you'll have to repair the damaged items on the c-rpg.net website when you can afford it. If you neglect to repair an item and it breaks 3 times it's gone for good.
Note: I have not had to repair like that in a good couple months so this information might be outdated.
