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Repossession and Bankruptcy |
What is repossession?
Repossession is the power of the creditor to take back goods when you fail to make loan payments on a secured item such as a car or jewelry.
Example: When you buy a car, you promise to pay the purchase loan and pledge the car as collateral to the creditor.
If you are in default or behind on a secured loan, creditors typically attempt to repossess the collateral and sell it. After selling the collateral, the money is applied to your loan and if there is still a balance, the creditor can sue you for the balance of the loan.
Stopping Repossession
Stopping repossession requires immediate action. Filing for bankruptcy protection will order that all creditors cease all legal actions including repossession.
If a creditor is threatening to repossess a property of yours, it is important that you consult with a bankruptcy attorney to advise you if this is your best option.
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