Creditors have many ways to collect on debts. People are most familiar with debt collectors calling or sending collection letters to try to collect on loans or debts. Even though this is the most common way to collect debt, debt collectors have other ways to get repaid. One common method is to repossess property used to secure a debt.
This method happens most with items like cars, but also with items like household appliances and TVs.
Legally, creditors can repossess your property if the property is serving as security interest or collateral on a debt. If the debt is not paid, the creditor may take possession of the property used to secure the loan. There are a few things to keep in mind, however. A creditor cannot just walk up and take possession of your property. The creditor must first head to court and obtain a court order or permission from someone in your home to enter it.
Even if you miss just one payment, you may be in default on your loan and the creditor is entitled to take the property. Additionally, if you make your payments, but fail to comply with an important term for the security agreement, they may have a right to your property. This may happen for instance, if you have a car but have let the insurance lapse.
You may also be declared in default if you’re current with payments but the property is sold, destroyed or stolen. Also if the creditor feels you will not be paying out the rest of the loan or you do not let the creditor examine the property at its request.
If you are dealing with overwhelming debts and need to discuss your legal rights, give our office a call today.