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Auto InsuranceCan You Ever Recover Financially After Repossession?Know Your Rights about RepoBy Catherine
BillSavings.com Brief:
In a struggling economy, more and more people aren't able to pay their bills. Can you ever recover financially after repossession? It helps to know your rights beforehand and look out for yourself during the repossession. Here is how you do it.
If you cannot make payments on a car loan, or think you may experience a problem in the near future, you should be familiar with repossession, what it means, and how to recover. Each state is governed by a different set of laws with regards to repossession and so you must do your research to make sure you understand your rights and what it means to recover financially after repossession. Before you default on your loan The lender can only repossess your car if they took the car as collateral for your loan. Unless you signed a security agreement, no other lenders can go after your automobile. A credit card company cannot repossess your car in order to collect the credit card debt you owe. Typically, when you sign a car loan, you also sign a security agreement. Valid agreements describe the type of car, or collateral, as well as its value. It also must belong to you. For example, if you buy a car for your son, he has all rights to the collateral and must sign the security agreement. If he doesn’t sign the agreement, there is no valid security interest and the car isn’t able to be repossessed by the creditor. Check the agreement to see that there is nothing missing and no glaring mistakes jump out at you. If there is a mistake and the security agreement is invalid, the creditor cannot repossess the car, even if you defaulted on the loan. If you can’t find your copy of the agreement, ask your creditor. After you default on your loan A lender cannot repossess your car until you default on the loan. How do you default on a loan? By failing to either pay the monthly premium or purchase insurance are the most common ways to default. If you lose or destroy the car, sell or move it without permission – these are also ways to default on a loan. Keep in mind that many states will not allow a creditor to declare that you defaulted without giving you reasonable notice or accepting late payments, especially if they’ve accepted late payments in the past. What does it mean to accelerate? Some security agreements have an "acceleration clause" and it’s important to determine if yours does once you’ve started defaulting your loans. An acceleration clause means you can’t fix the default only by paying the past due amount. Your lender can demand the entire balance of the loan or threaten repossession. State law determines whether or not your creditor has to warn you ahead of time that your loan is about to accelerate. Sometimes the lender has a legal obligation to tell you that you have a "right to cure" the default. During the repossession The lender cannot commit certain acts during the repossession. They cannot:
3/30/2009
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