Car and home repossessions are often the outcomes of a bad financial situation. Depending on your loans and employment outlook, you may be able to avoid repossession and also prevent future home foreclosure. Declaring bankruptcy can help you restructure secured lines of credit like car loans and mortgages, all while avoiding repossession. Here is a look at what happens during a repossession and how you can prevent it from happening to you.
What is Repossession?
If you cannot make payments on your car loan, the loan goes into default and the lender can reposes the vehicle because they have a lien on the property. When a bank lends you money for a car, its financial stake is secured to the value of the vehicle, and your possession of the car is contingent upon you continuing to make payments. This is known as a secured loan, and it functions similarly to a mortgage on a home, which can be foreclosed upon if the loan is in default.
How to Prevent Repossession
If the lender violates any federal lending laws, they may be prohibited from repossessing your car. Bankruptcy is another option that prevents millions of repossessions and foreclosures across the country. Chapter 13 bankruptcy is a legal action that can help you restructure your mortgage and car payments into reasonable monthly payments. The bank has an incentive to go along with this plan because it has a financial interest in the secured property you own. It may also be worthwhile to pursue loan modification programs aimed to helping you keep your home and car by renegotiating your interest rates.
Do not let repossession leave you without a means of transportation or a roof over your head. Both loan modification and bankruptcy can help you keep your property and move on with your life. At Dixon & Johnston, P.C., our experienced bankruptcy attorneys are skilled at helping clients avoid foreclosure and repossession. Visit our website or call (618) 233-1103 to schedule your free consultation.
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