There are two key types of repossession: voluntary and involuntary repossession. Their basic meaning is quite obvious by their name but let’s explain to you what they mean and how they work this time around.
It generally means that a consumer who failed to pay for his/her credit, vehicle, property or anything for that matter that can be considered a liability would surrender and voluntary give that object back before the actual repossession would occur. In the case of property it may work a bit different however, depending on the exact sum a consumer fails to pay and the exact percentage of the property being under mortgage.
Many people think that voluntary repossession will show them in better light than involuntary repossession. But the fact of the matter is, from the point of view of the lender, one is no different from the other and the debtor will not get a better treatment nor better conditions when he/she is voluntarily giving back something for which he or she has failed to pay.
Repossession will remain on the debtor’s credit report for 7 years. This means, that someone who is subject to a repossession either voluntary or not, won’t be able to get another loan for at least the duration of these 7 years. Credit history is something that’s taken very seriously nowadays, especially that there are so many credits open to get, that many people may fall victim to a so-called debt trap, which means to get deeper and deeper in debt in order to pay back previous debts.
Involuntary repossession may occur when someone would not only fail to show up at court and fail to receive all the posted warnings but also fails to communicate with anyone representing the creditor or the court itself. Repossession of a vehicle can already occur after failure to pay above 2 months. This simply means that someone representing the credit institute would show up and simply take the vehicle without a word. In the case of a property, the process is longer and depends on many outside factors, for instance the overall debt of the owner and the exact percentage of mortgage in the credit.
Property repossessions are rare to happen but they can happen if someone fails to pay and provide a valid reason or fails to renegotiate the credit conditions. Another thing that’s subject to the repossession is whether the owner is allowed to sell the property by him or herself or if he or she has to wait until the credit institute would officially put it on an auction.
The bad thing in either sort of a repossession is, that it would not automatically make the debt void. It would deduct the sum which the debtor owes. In case the sum with interests is more than that, the debtor remains in debt up until the point all this is paid to the credit institute.
Before obtaining a mortgage or any sort of credit make absolutely sure you are able to pay it back under any circumstances.