Most people often get worried whenever they get behind with their loan payment. This is especially because their creditors are entitled to repossess their belongings upon default. Repossessions involve taking back of the property you have used as security for a loan by your creditor because of defaulting on the loan agreement. Default can arise if you do not maintain insurance coverage on your car you financed or if you do not make your monthly payments on time and in full.
What can your creditors can repossess if you default on a loan?
- Your home: The lender can repossess your home if you do not make your mortgage payments on time. After the repossession, your creditor will evict you and sells your home to recover as much of the outstanding loan balance as possible.
- Your car: If you default on a car loan, the lender has a right to repossess your car even without a prior notice. Subsequently, the lender will sell it to recover any outstanding balance. If there is a shortfall between the sale price and the outstanding balance, you are held responsible for paying it together with creditor’s Repossessions expenses.
- Properties used as collaterals: For you to be given a loan, a specific item of property known as collateral is used to guarantee the repayment of your loan. IF you don’t repay or you are in default on the loan, the creditor can take the property without necessarily suing you and getting a court judgment.
What your creditors cannot repossess
- Properties not used as collaterals: Anything that is not named as collateral for a loan cannot be repossessed by the creditors.
- If a property is used as collateral in an unenforceable contract: This happens if the contract does not comply with your state’s legal requirement. In this case, your lawyer can advise you on your consumer rights and review your contract for validity.
- Credit card purchases: This is because credit cards are unsecured, and any item purchased with them cannot be repossessed
If you need a long term debt relief so that you can put to an end to the aggressive collection activity, contact the Law Margulies. They provide legal services in the areas of loan modification, mediation, foreclosure prevention as well as Repossesions prevention.