Monday, March 18, 2019

How to Stop the Repossession Process

There are many related issues when it comes to financial problems. For those who find themselves swimming in debt, it is likely that they are also dealing with creditors and collections agencies looking for their compensation. Sometimes when an individual does not have the ability to pay, the creditors will take the action of repossession. 

What is Repossession?

Repossession is the act of reclaiming property when an individual defaults on a loan. For instance, if you default on paying your car bill an Ohio creditor is able to take back the vehicle. When a motor vehicle has been purchased, the buyer is typically required to sign a security agreement, allowing the lender a secured debt – the right to repossess the vehicle as collateral for the loan. However, there are still legal defenses to repossession including if a creditor has continually accepted late payments or if there exists a grace period. Neither of these would qualify for repossession.

The Rights of a Creditor

A creditor generally has the right to commence the process of repossession as soon as an individual defaults on their loan. Though the creditor has the ability to repossess the vehicle (or other property), the individual acting on behalf of the creditor is prohibited from taking the property in any way that is otherwise illegal. A repossessed vehicle can be sold in order to obtain the compensation still owed to the creditor (i.e. what remains on the loan). 

The Options of the Debtor

Filing for bankruptcy stops the repossession process through an automatic stay and may allow you to protect your personal property. For those with poor financial outlooks, bankruptcy may just be the right option. It is often utilized for those who cannot manage their debt. Once an individual has filed for bankruptcy, an automatic stay goes into effect and stops all collection on outstanding debt. This includes wage garnishment and repossession. 

What Happens After Repossession?

After a vehicle has been repossessed, its must be disposed of or sold in a “commercially reasonable manner.” A debtor is also entitled to certain notices from the creditor, such as a notice of default and the right to cure, to the debtor within give business days. The notice is required to list the amount owed in order for the debtor to once again obtain the vehicle. There are also several charges, such as late charges, past due installments, reasonable expenses, and a deposit, which the debtor must pay. 

Once again, ten days prior to the sale of the repossessed vehicle, a creditor must send the debtor another notice, which includes the time and place of the sale of the vehicle, as well as the minimum price for the vehicle. It must also share what the debtor still owes after the sale, if anything. The vehicle is required to be sold for a reasonable amount of money. Proceeds from the sale must go towards paying off the remainder of the loan. Should the proceeds from the sale not add up to the amount still owed on the vehicle, a lender may file an action with the court to collect on the remainder. 

What Are Your Options?

Aside from filing for bankruptcy, a debtor may instead elect to work out a payment plan with a consumer-counseling agency. It is important to get all of the available information from a qualified bankruptcy attorney. If you need help with the repossession of your vehicle, Miami Valley Bankruptcy can help. To learn more or to schedule a free consultation, visit us online today!

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