Can a Bank Repossess My Assets to Cover My Debt?

bank repossesIf you have due loans or debts, you may be concerned that your creditor or bank may repossess some of your assets, for instance, a car. Repossession is when a creditor or a financial institution takes the assets placed as collateral when someone defaults on a debt or loan. However, creditors usually follow strict rules that limit their actions in case of a default. Generally, credit contracts usually differ, while laws also vary according to state. If you face a repossession threat, you should consider seeking help from Mobile AL bankruptcy attorney.

Which Things Can Be Repossessed?

If you don’t adhere to a crucial security agreement term or have due payments on a secured loan, it means you have defaulted. In some situations, for example, if you become insolvent or allow insurance to lapse, the lender can declare the secured debt a default, irrespective of you not having due payments. Most security contracts allow the creditor to take the assets pledged as collateral without filing a court case and obtaining the order.

So, what items can be repossessed by your creditors in case of a default? Here are some of them:

  • A Car

Most auto loans granted by banks, dealers, credit unions, or other lenders usually allow the creditor to repossess the car in case of a default. Typically, the lender doesn’t have to give advance notice before taking action. Repossessing allows the lender to resell the vehicle to recover their money. If the unpaid loan balance exceeds the sale price, the defaulter may be liable for the deficiency amount and the cost of repossessing the vehicle.

  • Assets Used as Collateral 

A debt or loan is usually termed as secured if a particular personal asset referred to as collateral is listed as the guarantee for the repayment. If a person fails to repay the loan or defaults for other reasons, most states allow the creditor to repossess the asset without filing a court case and obtaining an order.

For instance, suppose that you possess a debt-free vehicle and agree to offer it as collateral to invest in a business. In this case, failure to fulfill the loan contract allows the lender to take your vehicle.

If you have doubts about the security of a specific debt, you should consider reviewing the credit contract. The contract should clearly indicate what can make you be at default. For instance, you may have improper loan maintenance or be behind your payments.

  • Rent-TO-Own Items

Things that you rent with the option of buying can also be repossessed. They include electronics, furniture, and appliances. However, the creditor cannot just walk into your residence and take your assets. The creditor must obtain permission from someone in your home or a court order to enter your residence. Their bankruptcy attorney Selma may file and issue a court order on their behalf.

How A Bankruptcy Attorney Mobile AL Can Help

If you face a repossession threat, you should consider seeking legal help. A bankruptcy attorney Robertsdale will offer the right and best action based on your case. For instance, if a vehicle in your residence faces a repossession threat, there are several options available, like filing for bankruptcy with the help of a bankruptcy attorney Mobile Alabama. Although retaining the asset is subject to some factors, most individuals who file for bankruptcy retain their automobile. A Bankruptcy Mobile AL court order usually allows you to automatically remain with the asset, preventing anyone from repossessing it.

Are you facing a repossession threat for your assets? Reach out to us at Loris Bankruptcy Law Firm for legal help and appropriate advice. We will provide you with the most appropriate legal counsel based on your case.