Learn how to guard your large purchases against repossession.
A huge number of us make various large purchases over the years, such as buying a property, a motor vehicle, or even a boat. The lucky few are able to pay outright for these purchases which means that as soon as the transaction goes through the things that they have purchased – be it a house, boat, car, or anything else – become theirs. However, for the majority, buying something of this magnitude means having to take out finance, which in turn means that until the finance has been paid off in full, the item does not truly belong to you.
Your purchase will finally become yours once you have paid off any finance off in full. However, until then, it is important that you maintain the repayments on your mortgage, car finance, boat finance, or finance you have taken for any other large purchase, as otherwise you could end up losing the asset through repossession. Repossession is something that the credit/finance provider may be entitled to do in the event that you fail to keep up with payments on your finance. If this happens, you could not only end up losing the asset but also any payments that you have made on it so far.
In order to avoid repossession proceedings on any of your assets on which you still have finance to pay, you need to ensure that you keep on top of repayments so that the lender or finance provider has no reason to consider repossessing the asset.
More about repossession of assets
Every year, many people who 'own' assets such as vehicles or property end up having repossession notice served against them. In some cases, the proceedings are halted as a result of action taken by the 'owner' of the assets or through negotiations. On other occasions, the repossession proceedings are seen through to the end and the 'owner' of the asset ends up losing the property, vehicle, etc, because they have failed to keep up with the payments (i.e. have defaulted on repayments). Remember, although many people class themselves as being the 'owner' of a particular asset, such as a vehicle or property, they are not truly the owners until they have paid in full for it, which is why the asset can so easily be repossessed.
When a company is looking to repossess an asset they must usually serve a repossession notice under Consumer Credit Code regulations. The process is also dependent upon how much of the balance is actually outstanding – there is normally a special process in the event that the outstanding balance is less than 25 percent of amount that was financed (or $10,000 depending on which is the lower amount).
Stopping repossession proceedings
In cases where consumers are issued with a repossession notice, it may still be possible to halt the proceedings under certain circumstances. For example, if you can prove to the lender that you are due to receive money that will cover the cost of the outstanding payments, you may be able to negotiate a deferral of the repossession.
Alternatively, you may be able to negotiate with the lender if you are suffering financial hardship on a temporary basis, such as that caused through illness or unemployment. Whilst there are no guarantees with regards to repossession proceedings being halted, most lenders will be sympathetic to genuine cases of hardship and may therefore be willing to negotiate with regards to repayments. In some cases, lenders will be willing to reach an agreement with regards to a revised repayment schedule, which could involve paying lower amounts over a longer period of time.
If you are unable to reach an agreement with the lender with regards to sorting matters out without resorting to repossession, you may find that the next best place to go is Consumer Affairs or the Fair Trading Office, where you may be able to get valuable advice about what you can do to resolve the situation.
Do bear in mind that if you do reach an agreement with regards to your repayments with the lender but you then default on the payments again, you may find that the lender pushes ahead with repossession proceedings without providing you with any further notice.
Sale of the asset
In the event that the asset needs to be sold as part of the repossession proceedings, the company providing the credit will be looking to get the best price possible from the sale. It is also possible for the borrower to provide the details of a buyer to the credit company. The company is not obliged to agree to the buyer that has been introduced, but if you believe that the company has refused on unreasonable grounds, you can seek further advice. You also need to bear in mind that the money raised from selling the asset my not cover the amount that is owed. If this is the case, you may find that the lender starts proceedings to try and recover the difference between what you owe and what the sale of the asset has raised.