Although today’s economy is booming, many Americans are still having to tighten their purse strings. It can be difficult to justify a car payment when you need to pay for your kid’s braces or other pricey venture. Unfortunately, if you default on a loan, the creditor may try and repossess the property used as collateral for the loan which can really damage your credit score. However, when you know your rights, you can potentially stop repossession in its tracks.
If you’ve defaulted on a loan and are facing possible repossession, take a look at the considerations below to see your options and learn how you can stop repossession.
Act Before You Miss a Payment
The first option to stop repossession and reclaim your property is to contact the lender and alert them to your situation. Explain why you feel you won’t be able to make the next upcoming payment, and you may be able to negotiate a reduction in your payment amount. In most cases, the representative from your creditor would rather negotiate a payment arrangement rather than repossess the property, which is likely worth much less than the total loan balance.
Taking a preemptive step in your loan payments can mean stopping repossession of your property before the proceedings begin. Once repossession starts, it’s a more cumbersome process.
Make Up Late Payments
If you’re unable to warn your creditor of a late or missed payment, that doesn’t mean repossession starts immediately. Most agreements have a grace period (typically 30 days) before your creditor declares you in default, and then they will do so in writing. If you are not yet in default, you can stop repossession before it begins by paying the outstanding balance on your loan – including late fees and charges.
However, if you are habitually late on payments, a creditor’s graces on accepting those late payments may fade quickly.
Negotiate with Your Creditor
Beyond negotiating a more suitable payment plan, you also have the option to negotiate alternatives with your creditor. For instance, if you can sell your car for more than the creditor is likely to get from an auction or dealership – try that! While this doesn’t let you keep your car, it does stop repossession from occurring, but you must act quickly.
Another alternative is to surrender the vehicle. If you just can’t seem to find the money to make both the late and continuous payments, this may be your best route. In an ideal scenario, the creditor will agree to reduce the deficiency or waive it entirely. The creditor has incentive here as well, by saving time and money by not having to repossess the property.
Consider Bankruptcy
If all else fails, and it makes sense with your overall financial situation, consider filing for bankruptcy. Filing for bankruptcy can stop repossessions, collections on the deficiency balance, lawsuits, and bank attachments or wage garnishments from deficiency judgements. You have the option to file either Chapter 13 or Chapter 7 bankruptcy, so consider consulting with a bankruptcy lawyer to understand which is best for your situation. While these bankruptcy filings stop collections on deficiencies, they don’t allow you to keep the property without some form of payment or collateral.
Find the Option That’s Right for You, and Stop Repossession
Facing repossession is a frightening thing, and while there are options out there for you to stop repossession, finding the option that’s right for your situation is a whole other ballgame. At CMC Law, our practice is devoted to helping individuals facing this confusing territory and finding a plan that fits best with your needs.
If you’re interested in learning more about how to stop repossession in its tracks, give us a call at (404) 585-0040 or visit us online to schedule a consultation with one of our highly skilled bankruptcy lawyers.