When Threatened with Repossession of Your Assets: Do This

Are you experiencing financial hardship that has led to missed payments on a secured loan? When you purchase a car or a home, the physical asset becomes collateral on the loan used to purchase it. In other cases, you may volunteer an asset such as a car or home to secure additional finances. Whatever the case, failure to make good on payments could result in the lender pursuing repossession of your assets. 

When the debt collection calls begin, it is time to consider your options for avoiding repossession of your assets before it’s too late. In the state of Georgia, lenders are under no obligation to provide you with warning before repossessing personal property such as a vehicle, so the repo men could come calling any time. If the collateral is real estate, the lender is required to provide notice of a foreclosure, but foreclosure can happen very quickly in Georgia.

Contact the Lender

If a lender is threatening repossession of assets and you don’t have the money to pay what you owe, you don’t have to sit back and wait for the inevitable. Speak to the lender about amending the terms of the loan. You may find the lender is willing to work with you by adjusting your monthly payments to make them more manageable. 

It is important to understand such changes may come at a price. Ensure you fully understand the new terms and what they mean over the long term. For instance, the lender may move some of the principal to the back end of loan, meaning you will pay the loan off over a longer period of time and pay more interest. 

Loan Options

If you are already facing repossession of assets, whether you decide to secure another loan should depend on your future financial stability. If you are facing a temporary slump but know you will have the income to repay an additional loan that will save your car or home, there are a number of potential options that may work for you. 

Short term loans usually require that you put up collateral to secure the loan. This option is typically used by people who need quick cash and are able to repay at higher rates. Alternatively, you may wish to consider a consolidation loan. While this type of loan won’t directly take care of missed mortgage payments, it can consolidate the majority of your debts into one easy to manage payment. Always check the terms of any loan to make sure you are getting value for the money borrowed. You risk losing other assets if you use them as collateral, or you may be required to pay outrageous interest rates. Obtaining a new loan is not always the best option.

Bankruptcy Options

A Chapter 7 or Chapter 13 bankruptcy may help you prevent repossession of your assets. Both options will result in an automatic stay being issued by the court. This legal mechanism prevents creditors from pursuing debt while the bankruptcy process is ongoing. 

A Chapter 7 bankruptcy may result in the discharge of unsecured debts, such as credit cards and medical expenses, while allowing you to continue paying secured debts such as a vehicle or home. However, unless you are current on secured debts, Chapter 7 may not help you keep those assets. A Chapter 13 typically allows you to keep your assets while paying all or some of the debts through a court monitored repayment plan. How much you might pay in a Chapter 13 case depends on your unique circumstances. Whether a Chapter 7 case is a better option depends on various factors, such as your income, assets, and your particular situation. An experienced attorney can help you determine which chapter of bankruptcy will work best for you. 

If you would like further advice, reach out to the offices of H. Lehman Franklin P.C. in Georgia today. Call on 912-764-9616 or email at info@hlfranklin.com for information on how filing bankruptcy may help you prevent repossession of assets.