Pretty much any line of credit that you take out as an individual will fall into one of two categories. Unsecured credit, like credit cards, doesn’t have collateral objects that the lender can take back if you fall behind on payments.
Secured lines of credit, on the other hand, have physical items attached to the loan. Mortgages and car loans are two of the most common kinds of secured credit. Secured credit makes it easier for banks to put up large amounts of money for individuals because they have the option of taking back the valuable item if someone falls behind on payments.
Do you have any options if you believe the lender who financed your vehicle purchase will soon attempt to repossess it?
If you can catch up on payments, that can stop repossession
Depending on the terms in your loan documents, you may be able to stop repossession if you call your lender and make a payment for the full past due amount, as well as any fees that they have applied to your account. However, if you didn’t have enough money in your budget to make a payment in the first place, making multiple payments and covering fees may be impossible.
Filing for bankruptcy can temporarily stop repossession
If you need your vehicle to get to work and know that your financial situation isn’t going to improve in the near future, filing for bankruptcy can help you keep your vehicle in the short term and possibly put you in a better position to negotiate with your lender. An automatic stay from filing bankruptcy will stop repossession activity at least temporarily.
If you find yourself facing the repossession of a financed vehicle or similar situations, you may need to consider bankruptcy as a solution for your current financial issues.