How to Stop Repossession
The nightmare of property repossession can begin in numerous ways, including the loss of a job, unmanageable credit card bills or high medical bills. Occasional missed and late payments lead to unpayable past-due accounts, creditor harassment and eventually the loss of your vehicle, mobile home, home, boat, second home or another property.
There is a way to halt the repossession, replevin and foreclosure processes before your property is lost. Chapter 7 and Chapter 13 bankruptcy are tools by which you can take the power out of creditors’ hands and put it in yours.
- Through Chapter 7, individuals and families can protect their cars and other personal property from repossession, eliminate debt and get a fresh financial start.
- Chapter 13 allows individuals and families to impose debt repayment plans on creditors through the bankruptcy court, allowing filers to avoid repossession by creating a debt repayment plan that has affordable debt payments and can be completed in three to five years. Past-due payments may be made up over the course of the plan.
There are some ways to avoid repossession. Perhaps the most direct way is to simply catch back up on the payments you owe, which you might be able to do with some strict financial planning or with the help and assistance of a family member or friend. Another way to avoid repossession is to refinance.
With a newly refinanced loan, you might be able to afford your monthly loan payment obligation by spreading out your repayment period over a longer period of time and by lowering the interest rates that apply to your account. It’s always best to apply for a refinance loan as soon as possible, and before you start running the risk of missing a debt payment.
Another potential solution is bankruptcy. By filing for bankruptcy, a vehicle owner may be able to put the collection efforts of his or her lender on hold to prevent or delay the vehicle repossession process.
It’s important to understand the law behind repossessions of property. In most situations, all the creditor requires is for you to default on your loan. Then, the creditor can repossess the property that secures the loan — such as a vehicle in the case of a car loan. It’s therefore important to reach out to your creditor before you miss a payment, or immediately after you miss a payment. You may be able to negotiate a resolution to your financial dilemma that does not involve vehicle repossession.
Getting behind on your car payments usually results in your creditor sending the repossession specialist to your home to collect your vehicle. The first instinct of many vehicle owners facing repossession is to hide their vehicles.
If the repo specialist can’t locate your car, it can’t be taken away from you, right? Before you take an action like this, you might want to think your decision over and consider how to resolve this problem in a more appropriate way. Hiding your vehicle is a temporary solution at best and may be unlawful. The filing of a bankruptcy is a legal way to deal with a delinquent vehicle debt and avoid a repossession.
Repossession professionals use every trick in the book
Simply hiding your car might help you avoid the repo man temporarily. However, these professionals employ every trick in the book to locate your hidden car. They may watch your home and follow wherever you drive your vehicle. As soon as you park, they will grab it. Towing your car only requires a minute or two with the proper equipment.
Another important point to make is that when it takes longer for the repossession man to get your vehicle, the repossession man will charge the bank more money for his services. These charges will then be transmitted to you by your bank.
If you stop making your car payments, your vehicle will eventually get repossessed. This will involve a repossession agent employed by your lender coming to your home, hooking your car up to a tow truck, and taking it away.
It is your lender’s legal right to repossess your vehicle if your loan goes into default, but knowing this certainly doesn’t make the experience any easier. You will lose your mode of transportation and whatever value you own in the car, and you will also incur other stiff penalties and fines — not to mention the effect of a vehicle repossession on your credit report.
The negative affect on your credit rating
Repossession will certainly have a negative effect on your credit rating in several ways. First, the repossession itself will hurt your credit score. Second, the repossession will show up on the public record area of your credit report. Third, if your lender succeeds in securing a deficiency judgment regarding the amount of money you still owe, this judgment will also show up on your credit report.
These negative events will follow you on your credit report for the next seven years. However, as more time passes, the negative impacts will become weaker and weaker.
If you are delinquent on your automobile loan, bankruptcy offers a few advantages. Due to the automatic stay provision of the Bankruptcy Code, filing bankruptcy will stop repossession efforts. Of course, since your lender has a security interest, it can request that the automatic stay is lifted. At this point, you have the following options:
Reaffirmation: In a reaffirmation agreement, you agree with your lender to repay your loan debt according to the terms of the initial agreement.
Redemption: Under the redemption process, if you can pay your creditor the fair market value of the vehicle in a lump sum, you can keep your vehicle.
Surrender: This involves simply giving the vehicle back to your creditor. In certain situations, this may be the best option because the debt you owe on the vehicle can be discharged.
Chapter 13 filing: If you have owned your vehicle for more than 910 days (two and a half years) you can pay your creditors the value of your vehicle, rather than the value of the note. This offers significant savings. Our law firm can usually reduce your interest rate as well.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.