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, the process isn’t always that dramatic. In many cases, people are aware that it’s a possibility and has ample opportunities to stop it before it takes place. But what exactly is repossession under United States law?
How does repossession 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 this process 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.
Three options to avoid repossession
There are several options to avoid repossession before the process begins. Here are three to consider:
1. 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.
2. Give the property back
If you are solely worried about the actual taking of your property, you can try to give the property back (along with more funds) to your original lender. Some lenders may hesitate but others may come up with a creative solution.
3. 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.