When we are talking about repossession, we must know what it is in a real sense?
" Repossession" is what happens when a creditor takes property put up as collateral because you are a defaulter on the debt. At this time you need to be aware of what are the rules that a creditor can and can't take from you.
What is Repossession in USA?
Repossession is the seizure of property that arises due to the non payment of a debt. It is a debt that can happen quickly and without warning.
Some lenders can technically able to repossess collateral immediately after a missed payment, whereas most repossessions take place on accounts that are 10 days or more past due.
The repossession can include your home, car or any other item that you purchase with credit,for instance electronics, furniture, appliances or motorcycles etc.
Every state's credit agreements and lows differ . Like repossession in Florida must be different from repossession in California.
Mostly creditors can repossess:
- Motor vehicles, cars, motorcycles
- Rent-to-own items
- Your personal property that is secured but is pledged as collateral for a debt
What creditors can't repossesses:
- Property you haven't designated as collateral
- Things you bought with a credit card
- Property named as collateral in an unenforceable contract.
The Items Those Can Be Repossessed
If you are not able to pay a secured debt, you become defaulted. If you let insurance lapse or you become insolvent, the lender might have the right to declare a secured debt in default, even if you are currently on payments.
With security agreements, the creditor will take the property you pledged as collateral without going to court and getting a judgement beforehand.
Few Things creditors can repossess if you found default:
Car Can Be Repossessed
When you are trying for an auto loan you go through the dealer, credit union, bank or from any other lender, and you are becoming the defaulter then you become the reason for repossession in USA and you have to give the creditor the right to repossess the vehicle.
Keep it in mind that your lender is not bound to give you advanced notice before taking your car.
After repossessing your vehicle, the lender will sell it to recover the owed money. If the outstanding loan balance is more than the sale price, you will again be held responsible for paying the deficient amount along with the creditor's repossessed expenses.
Rent-to-Own Items Can Be Repossessed
The items which you can purchase in rental form such as electronics, appliances, furniture can also be repossessed. Here the creditor can't just enter into your room to lift away your rent-to-own items but the creditor can get a court order to bring items from your home.
If you leave the property at the backyard like barbecue and lawn furniture then the repossessor can't break down a fence to get into your backyard to get it.
Property Used As Collateral Can Be Repossessed
When your debt is secured or it is used to guarantee repayment, it is named as collateral repayment. If you don't replay the debt due to any reason, in most states like repossession in Texas or repossession in Georgia let the creditor take the secured property without first suing you and getting a court judgement.
If you are unsure whether your particular item is secured or not, then the agreement can also detail what would put you in default on the loan, like being behind on your payments or not maintaining proper insurance.
Items Can't Be Respossessed
Creditors cannot take those items which do not have a security interest in an item of property. Those property or items can't be taken without a judge or court's approval.
However, be alert, the creditor can always sue you in court and can recover the money you owe to them. If the creditor wins that lawsuit then they are able to garnish your wages, can seize or put a lien on your own property and can sell it.
Creditors Can't Repossessed:
Which Are Not Collateral Cannot Be Possessed
If any item within your property is not exclusively named as collateral for a debt, it cannot be repossessed. If you have an unsecured personal loan and a motorcycle loan. You are defaulting on your personal loan.
So you need to make payments on the bike loan, the bank cannot repossess your motorcycle because it was not named as collateral for the personal loan.
Credit Card Purchased Items Cannot Be Repossessed
Credit card debt is always unsecured, so it cannot name anything as collateral for the loan. So the items which you have purchased through credit card cannot be repossessed.
A contract that does not go with your state's legal requirements or becoming reasons for repossession in USA, might be void and unenforceable. So here the creditor might not be able to repossess collateral named in the agreement. The lawyer needs to review your contract of validity and advise you for your consumer rights.
How Does Repossession Work in USA?
After you become the reason for repossession in USA, the repossession is reclaiming ownership of your loaned properties. Usually banks or lenders can invoke this process whenever you miss a payment,
and they will use third party vendors to arrange physical repossession or the items. Most lenders try to avoid repossession whenever possible as the financial return is very low.
How One Can Avoid Repossession in USA?
When you are behind your payments for a secured debt, you need to find ways to avoid your repossession. Here Debt Consultation is providing you some options to avoid repossession.
You have missed your payments and cannot afford your current bill, it is wise to contact your lender. Discuss with your lender regarding a new repayment plan to give a proposal that works for both parties.
Review Your Finances
If your car is repossessed and you fell behind your payments for a reason, it means you cannot afford the car you purchased. In such a situation you can review your budget and make sure to afford your expenses.
If your income is stretched too thin and your situation is not going to change then letting go of your car can be a wise decision.
Understand Your Rights
If your car is repossessed, then you still have the right to protect you. For instance if any property you kept in the car is still yours.
The creditor repossesses your car, they can sell it, however they can't sell your personal possessions. Here your creditor needs to return your property to you as per the law.
Work On Your Credit
After losing your property or car or bike, it is important to take measures to protect and improve your credit going forward. A property repossession can put a serious dent on your credit report.
Give The Property Back
When you are not able to do the payments due to your financial issues you can try to give the property back. Along with more funds when you return the property to your original lender, few lenders may hesitate to take it and come up with a creative solution. So go for a try.
Can Delay The Process Through Bankruptcy
If your loan is huge and you are going through tough financial issues, then bankruptcy can be the solution. Instead of being the reason for your repossession in USA, file for chapter 7 bankruptcy. It can help you set up a payment plan and also delay repossession on your vehicle or any other large assets.
What is repossession in USA and how is it giving you a very bad experience? When you are questioning yourself about this then it will leave you with a hopeless feeling.
It is a fact that the situation is very tough and comes with serious consequences, facing the repossession head on and coming up with a plan can help you recover and rebuild your credit score.
If you are struggling to make ends meet, then consider taking help from any debt help firm like Debt Consultation. Debt Consultation can help you to get back on your feet, from covering your property or car payment.