Repossession is when a leasing company or lender takes possession of an asset such as a vehicle or a home away from a borrower due to unpaid debts. This can happen when the borrower is behind on payments and can be done without warning.
In recent years, there have been laws set in place that require lenders to inform borrowers when they are late on their payments. They are, however, not obligated to inform you on when they will be repossessing your home or vehicle. A third party tow truck service will do the repossession or the lenders can remotely disable the vehicle electronically. This feature will stop the vehicle from turning on.
The lenders, once they repossess the vehicle, will sell it to recover the losses incurred from the unpaid loan. The vehicle is sold off at a fair market price to protect consumers. This is because if the car is sold off at a lower market price, the borrower will still be needed to pay off the balance
Repossession can only happen when your loan is secured against that particular asset. The repossession process starts only when;
- You have been issued with a 30-day notice
- You have been provided with a default notice
- You are behind on payments
Once the 30-day notice expires, you are required to lodge a request to postpone the repossession, negotiate an alternative resolution, or offset the amount due. If you owe less than 25% of the total amount of the loan or under $10,000, your lender will require a court order to repossess your assets.
How To Stop Repossession
Luckily, there are a number of ways to stop repossession.
Paying the amount overdue
While this is the easiest way to stop repossession, it is not an option for many people. The costs are high and affording even a single payment can be tough.
Talk to your lender
Reach out to your lender about a possible deferment, pushing back the deadline, or adjusting the terms of the loan, Many lenders have hardship programs to assist borrowers that cannot meet their deadlines because of long-term or temporary financial problems.
Consolidate your debt
Consolidation loans usually have lower interest rates. Borrowers can use a consolidation loan to redeem their vehicle loans. Consolidation loans are used to pay off other outstanding loans.
Bankruptcy
Filing for bankruptcy causes an automatic stay on the debts of the person filing. Filing for bankruptcy stops repossession of assets by the lender. And even allows a lender to keep one personal car. This process can however be annulled if the vehicle was bought through a secured loan.
Reinstate
This is off-setting all due payments plus all extra costs related to the repossession. This ideally puts the borrower in the same situation they were in, even though they now have their vehicle back. To many people, this is not a long-term solution to their debt problem.
What Are Your Rights
When being repossessed, it is crucial to remember that you have rights. The lenders are bound by law to only take legal action against you if they have issued you with a 30-day warning and a default notice.
Without written consent from you or a court order, the lenders cannot enter your property or repossess assets. However, you should note that if you are facing repossession of your car, you should always park it on your property as the lenders are allowed to tow it if they find it parked on a public street.
Why Consolidated Loans?
For people that have defaulted on loans, getting a consolidation loan is one of the most viable options left. Consolidation loans not only help the borrower redeem their car loan but also convert their secured loans to unsecured debt. In the end, this brings better results for both the lender and the borrower.
Your Financial Solution
Many people that default on loans are either dealing with financial struggles or have lost their major sources of income. This is to say that they have no options left to get them out of this mess.
Sort Your Financial Crisis Here
Reach out to Encompass Recovery Group where we will give you solutions to your financial troubles.
We offer consolidation loans that come with lower interest rates and are unsecured to help you offset your already existing loans and prevent repossession of your property.
If you are struggling with paying off a loan, reach out to us today, and get help.