There are many different legal issues which individuals that have repossession businesses or individuals that are facing the possibility of having something repossessed need to be aware of. Each state has individual and different repossession laws, so it is important to be aware of what can and cannot happen with regards to repossession.
Basically any type of repossession occurs when someone owes money on a tangible item and the borrower has defaulted on the payment. These types of repossessions can occur because the borrower actually has a form of a secured loan with the item itself being used as collateral. Since this is a form of a loan, the purchaser who is also the borrower, really is not the owner of the item until the loan for the item is paid in full. The lender actually, in legal terms, continues to be the owner until the note is paid off in full. This allows the lender (with right of ownership) to take the property back without having to go through the court to get a judgment against the party with the right of possession.
Usually most companies that offer equipment, vehicles and other large items don't actually do the repossession, rather they hire a specialized company to go out and collect the property. Even in states where repossessions can be done through these companies, there are still legal precedents that limit or structure the ways and means that the company can use to get the property back. In most states the following legal issues are in place regarding the repossession process:
• The borrower must be made aware that the loan is outstanding and must be informed in the original loan agreement that default on the loan of a specific number of payments will result in repossession action by the lender.
• The individuals completing the repossession cannot commit any illegal acts or cause a breach of the peace in regards to obtaining the item. They cannot break into a house, garage or property that is secured to obtain the item.
• The company or agent cannot damage anything to obtain the item. This means they cannot pull items out of a house and put a hole in the wall or the kitchen cabinets or otherwise damage the property while removing a stove.
• The creditor or the repossession agents cannot threaten to or actually remove any property other than the item you owe money on. This means that they cannot, for example, take a boat that may be on a trailer that is attached to a truck that is being repossessed.
In the United States if a repossession company breaches any of these laws the repossession can be overturned through a court of law and the individual can also be awarded damages.
There is a lot of information, but also a lot of misinformation, about various types of repossession. Houses and other types of properties, like anything else that is bought through a loan or financing, is subject to repossession. Houses and properties typically have a much longer grace period or pre foreclosure period prior to the actual foreclosure and repossession than smaller items such as car, electronics or appliances. Since houses are much larger and many times more money that other items subject to repossession there is absolutely no need for a quick repossession. Houses are typically best managed if the current resident, commonly called the owner, can stay in the house and manage to either refinance the loan or get a modification on the loan.
As with any type of repossession, houses and properties can only be seized under very specific conditions. The loaner or lender must notify you, usually through a registered letter, that the payments have not been received as per the financing agreement. The lender should supply a record of payments and what balance is outstanding, the description of the property and the physical address, your name and information as well as what the lender is requiring to happen to prevent the foreclosure or repossession. Houses going into this pre foreclosure stage may also be listed on various pre foreclosure websites, so the owners should be prepared for a flood of letters, postcards and even phone calls to purchase the property or to refinance the loan.
Owners at this time need to seriously consider their options and to contact the lender to try to work out a plan for repayment and modification of the loan. Lenders typically will work with the homeowners to prevent having to go all the way through to foreclosure and having to repossess the house. Lenders are much farther ahead taking a lower monthly payment over a longer period of time than the original loan then they are trying to sell the house once it has been repossessed, especially in a downward housing market.
You may also file a hardship letter or a specific claim form that is provided in the information sent by the lender. It is important to appear at any court hearing to explain your situation and get your options for resolution on the record if you are given the opportunity. Getting an attorney is also important in the case of repossession. Houses and properties that are subject to repossession are typically handled by a real estate attorney that specializes in foreclosures.
This website uses cookies that are necessary to its functioning and required to achieve the purposes illustrated in the privacy policy. By accepting this OR scrolling this page OR continuing to browse, you agree to our Privacy Policy