Financing Your Life A Guide to Controlling Your Finances, Today
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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.
