Whether you are behind on your car payments or your house payments there is probably a repo man lurking right around the corner. Don’t worry, as you are not alone. With the economy being in the shape that it is in there are many individuals that are having a hard time making their payments. With that being said, you need to know that repossession could drive your credit in the ground, but it is entirely possible to get ahead of the situation or stop it entirely. Below, you will learn more about repossession and how you can go about getting it of your credit report.
When Does A Repossession Occur?
Repossession will usually take place after you have stopped making your monthly, weekly, or yearly payments. For instance, when you go to buy a car or a home, you probably can’t afford to pay for it outright, so you have to get a loan from the bank. Well, the bank that issued you the loan owns that vehicle or home until you have completely paid the loan off. If and when you stop making payments on the car or home, the bank legally has the right to come and take possession of the property.
In fact, the bank doesn’t even have to notify you that they are taking the vehicle. They will just hire some to show up and take it, and resell it in order to recoup on their losses. With that being said, you usually have to be behind several payments before a situation like this occurs. So, if you are behind it is entirely possible to get caught back up before they come and take your vehicle, home, or whatever you took out the loan for.
Damaging Your Credit Report
If the situation has gotten so bad that the bank has came and took back possession of the property, you are going to be in major trouble. Repossession can show up on your credit report for 7 years, so anytime you apply for a credit card or another loan this is going to show up. This basically means that most creditors and lenders are probably going to deny your request for a future loan. If you actually do get approved for the loan, you will probably end up paying outrageous interest rates. Until you remove repossession from your credit report it will haunt you for the rest of your life.
Facing Possible Legal Actions
Along with seizing the property, it is entirely possible that the bank or lender can even take legal action against you to recoup what they have lost. For instance, say that you still owed $20,000 on the vehicle that got repossessed. Well, if the bank sold that car for $10,000, it is possible that the bank could come after you for the remaining $10,000. Along with this, you will still have this bad mark on your credit score.
Getting The Blemish Off Your Record
As mentioned above, a repo will usually stay on your credit report for seven years, but it is possible to have the blemish removed before the seven years are up. If you are just unable to make the payments due to lack of funds there are some banks and lenders that will work with you. For instance, you might be able to renegotiate the payments, so that you only have to pay a portion each month of what you were paying before. If you are able to renegotiate the payments it is likely that this blemish will be removed from your record.
Along with this, you also have the option of disputing the repossession. If your bank or lender cannot verify the repossession within 30 days of the dispute, the blemish can also be removed from your report as well. If none of this makes any sense to you, your best option might be to turn to a credit repair company, which can help you in a variety of different ways when it comes to bad credit and repossession on your credit report.
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Loss Of Assets
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Financial institutes and banks are only interested in one thing, when it comes to customers defaulting on loans, preventing a loss. The laws that govern repossession vary from one state to another. While some states permit immediate repossession after the terms of the contract are breached, other states will specify a grace period.
Once you breach the terms of your contract, you will risk immediate repossession of your personal assets.
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