Types and ways of repossession
If you owe to a credit institute and you fail to pay your due for a few months, then one or more repossession procedure may get started in order for the creditor to get the sum which you owe them. In this chapter we would like to discuss the various types of repossessions and their effects on your financial status.
Where can repossession occur?
Each year there are hundreds if not thousands of people who realize their inability to pay their credit back in due time all too late. Therefore, their previous purchase results in a repossession. This basically means, that what was given will be taken away, at least according to the percentage someone owes money. If it’s about a liability, most often than not that liability will get repossessed, especially if the payback was in a very early stage. This may even mean, that after repossession, the debtor still may need to pay back the interests.
There are several ways of repossession:
It all depends on the types of loan or mortgage that you obtained and which you are unable to pay back. The bad thing in repossession is, that even if something is taken back or away, meaning a car or any other vehicle or a property, this may not cancel out the whole amount of the loan and the interests which you may need to pay back. In case of property repossession, what generally happens is that the credit institute will auction out your property and deduct the price which is paid for it from the whole amount of the loan credits. If you are unlucky, even when the property is gone, you will still be left with sums to be paid back.
Repossession will hurt your credit score and you won’t be able to obtain a credit for at least 7 years more.
How to avoid repossession?
There are many ways to avoid house repossession. For instance to think ahead and only go for a mortgage or any other sort of a credit when you are absolutely sure, you can pay the credit back. Most people whose car or property is repossessed are unable to pay their credit due to the fact, that what they earn is not enough to live, pay the bills and pay the credit. Several instances people just do not count with the additional costs of a credit which may leave them sinking deeper and deeper in debt. This is what’s called a debt trap.
Another way to avoid repossession is to renegotiate the conditions with the creditor.
Most creditors are more than open for re-negotiations as long as someone can guarantee a payment.
Credit insurance is the best way to cover you for a couple of months, in case you lose your job or get in other sort of a trouble that causes a larger loss of your money. Good credit insurances have the ability to cover you for up to 6 months, especially in case you can confirm your inability to work or having a long term illness with clinical bills and papers.