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Avoiding Repossession

FYL 6.23.16
When you use credit to buy any big-ticket item, you run the risk of having the item repossessed if you

don’t make the payments as agreed. While the word repossession usually brings to mind a car or other

vehicle, other big-ticket purchases can be repossessed, including rent-to- own furniture, items used as

collateral on loans, and your home (through a process called foreclosure).

Making payments on time every month is the best way to avoid repossession, but there are things you

can do if you get behind on payments and want to avoid having your property reclaimed.

Sell the Property

Sometimes people get behind on their bills because of a temporary setback. Other times, the payment

lag is part of a bigger problem. If you’ve become past due because you legitimately can’t afford the

items you bought, then you might want to consider selling them rather than trying to get caught up and

keeping yourself in the same financial struggle. If the property is worth at least as much as the

outstanding loan, then selling it could help you get free and clear of the debt. If you can’t sell the

property for as much as you owe but can find a private buyer willing to pay more than the creditor could

get at an auction after the item is repossessed, then you may be able to call your creditor and get them

to agree to a lower price to settle the debt.

Talk to the Lender

Many people tend to shut down when they get past due on bills. They may be embarrassed,

overwhelmed or stressed out and this causes them to retreat. But often, being open, honest and willing

to work can help you overcome many of the issues brought on by late payments. If you are already

behind on your loan and know that you are going to have difficulty catching up in the near future, call

your lender to see what kind of agreement can be reached. Many lenders want to avoid the expense of

repossession just as much as you do and are open to deferring one or two payments or developing a

new payment plan to help you get caught up.

Remember, hiding the property you don’t want repossessed is never a good idea. First, it’s illegal to do

so in many states, and second, it could become more expensive as it forces your lender to seek a court

order to have you return the property.

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