Stop Repossession in Its Tracks
Many people find themselves facing repossession when they’re struggling with debt. This can be a scary time, but there are steps you can take to stop repossession in its tracks.
One of the best ways to do this is to talk to your lender before you miss a payment. They may be willing to extend your payments or offer you a compromise on the amount you owe.
1. Talk to Your Lender
Keeping your car loan current can help you avoid repossession, so you should speak with your lender as soon as you realize you might miss a payment. Many lenders have more lenient policies than others, so be sure to read your contract and ask questions.
If you can’t pay your entire balance on time, talk with your lender about a reduced monthly amount or an interest rate that will make your payments more affordable. This will save you money in the long run and give you more peace of mind.
You’ll also want to review your loan agreement for any acceleration clauses, which may allow your lender to collect the full balance of your debt immediately.
You’ll also want to consider any fees that your lender may have charged for repossession and auction. These fees can add up to a deficiency, which you’ll need to pay before your vehicle is sold.
2. File for Bankruptcy
Bankruptcy is a legal option to help you get a fresh start. It can stopping repossession and allow you to re-establish credit so you can take control of your finances again.
Filing for bankruptcy is a big decision that must be made carefully and with the help of an attorney. The first step is to gather and organize all of your financial documents. This includes your credit report, recent pay stubs, bank statements and loan and credit card statements.
Once you have these documents, your attorney will file your petition and other forms with the court. The court will then issue an automatic stay that protects you from debt collectors and stops all other collection activity.
If you are struggling with car debt, it may be beneficial to consider filing for bankruptcy. A Chapter 13 bankruptcy can lower your monthly payments on your car loan and allow you to keep the vehicle. However, you must pass a means test to qualify for this type of bankruptcy.
3. Sell Your Car
Repossession can put a serious dent in your finances and your credit score. Fortunately, there are ways to stop repossession before it occurs.
Talking to your lender can help you understand the options available for avoiding a repossession and regaining control of your car. They may be able to work with you to modify your payment terms or offer a paused payment option like forbearance.
Your lender also can sell your repossessed vehicle at auction to recoup as much of the loan balance as possible. However, they must ensure the sale is commercially reasonable and notify you of when and where it will take place.
You can also voluntarily surrender your vehicle outside of bankruptcy to avoid the full repossession process. This could save you some credit score damage, but it’s important to note that you will still owe the remaining balance in addition to fees and interest.
4. Sell Your House
A lot of people don’t know this but if you’re in serious debt and have your house at risk, you can sell your property to stop repossession. Selling your house can give you a fresh start and clear the credit you need to take out future loans.
However, it’s important to be aware that selling your home will be a lengthy process and may not occur in a timely manner. Therefore, if you’re facing the possibility of being repossessed, you should get in touch with your lender as soon as possible and discuss your options.
It’s also important to prepare your home before putting it on the market. This means cleaning and decluttering the house, removing clutter, and making any repairs that need to be made.