Facing repossession? Act fast,

Repossesion is the legal process a lender uses to take back property (often a vehicle) from a borrower who has failed to meet the terms of their loan agreement, typically due to missed payments.

The two main types of repossession are voluntary repossession and involuntary repossession. With a voluntary repossession, the borrower willingly returns the property to the lender, often after realizing they can't afford the payments. With an involuntary repossession, the lender takes back the property without the borrower’s consent typically using a repossession company.

Missing a payment can lead to defaulting on your loan. After a certain number of missed payments (usually detailed in your loan agreement), the lender can begin the repossession process.

The process typically begins when a borrower misses one or more payments. Depending on the loan agreement, the lender might need to send a notice of default or intent to repossess. However, notice isn’t always required.

The lender then physically takes possession of the property and sells it to recover the owed amount. In some cases, the borrower may have a right to reclaim the property by paying off the full loan balance plus any associated costs before the sale.

Possibly. Once a car is repossessed, the lender will likely sell it at auction. If the money from selling the car doesn’t cover the full amount owed, you may still be responsible for paying the balance, known as a deficiency balance.

• Depending on the jurisdiction, you may have the right to receive notice before the repossession or before the sale of the property.
• Some jurisdictions allow borrowers to catch up on missed payments and reinstate the loan before repossession occurs.
• Lenders cannot breach the peace when repossessing property. They may not use force or deception when repossession your car.
• The lender must sell the property in a reasonable manner, which generally means selling it for fair market value.
• If the sale of the repossessed property results in surplus funds (more than the amount owed), the borrower is typically entitled to that surplus.
• If the sale of the repossessed property doesn’t cover the loan balance, lenders may seek a deficiency judgment against the borrower but some states have restrictions on this.

Repossession is reported to credit bureaus and can significantly damage your credit score. The repossession and any deficiency judgments may also appear on your credit report for several years.

Yes, once you file for bankruptcy, an automatic is triggered, which halts the repossession and gives you time to reorganize your debts.

If you believe your property was repossessed in error or without following proper legal procedures, you should contact an attorney. You may have the right to reclaim your property or receive compensation.

In some cases, yes. Options include paying the overdue amount to bring the loan current, negotiating a new payment plan, or filing for bankruptcy, which may temporarily halt repossession efforts.

In some cases, yes. You may have a right to redeem the property by paying the full loan balance plus any additional costs before it’s sold. Depending on the state, you may be able to reinstate the loan by catching up on missed payments.