Most people have an extreme perspective of the repossession process. You may imagine people walking into their homes, taking each of their valuable items and loading everything onto a single truck.
However, repossession isn’t always that dramatic. In many cases, people are aware that repossession is a possibility and has ample opportunities to stop it before it takes place. But what exactly is repossession under United States law?
How does it work?
Repossession is reclaiming ownership of something that hasn’t been paid off yet but still has value. For example, many people may have their cars repossessed if they haven’t continue payments against their initial car loan. The same can be true for real estate properties, fine jewelry and artwork.
Usually, banks or lenders can invoke repossession whenever you miss a payment. And they will use third-party vendors to conduct the physical repossession of the item if necessary. Most lenders want to avoid repossession whenever possible since the likelihood of a financial return is very low.
Lenders and owners should find a different option in order to prevent the repossession and pay off the remaining debt.
How to I avoid this?
There are several options to avoid repossession before the process begins:
- Contact your lender – if you know you are missing payments or cannot afford your current bill, contact your lender to discuss a new repayment plan or proposal that works for both parties.
- Give back the property – If you are solely worried about the physical repossession, you can try to give back the property (along with more funds) to your original lender. Some lenders may hesitate but others may come up with a creative solution.
- Delay the process through bankruptcy – If you are dealing with large financial issues, filing for chapter 7 bankruptcy can help you set up a payment plan and also delay repossession on your vehicle and other large assets.
The best option for you depends on your specific situation. You need to reflect and decide what works for your circumstances and allows you to keep the assets you worked diligently for.