Repossession is a legal process where a creditor can take personal property from a debtor in order to receive payment for a delinquent debt. The creditor typically has a lien or security interest on the property, which allows them to reclaim the item if the debt is not paid. Repossession generally occurs when the debtor falls behind in payments or defaults on the loan. In most cases, the creditor will send a notice of intent to repossess the item and give the debtor a chance to voluntarily surrender the item, or make up the past due balance before they take legal action. If the debtor fails to act, the creditor will likely hire a repossession agency to recover the item.
Repossession is often thought of as an extreme measure, but it is one of the more common debt collection tactics used by creditors today. While the laws governing repossession vary from state to state, in most places the creditor does not need a court order in order to reclaim the item. They are also generally not required to provide any sort of notification to the debtor prior to taking it back. This allows creditors to quickly and efficiently reclaim their items without having to go through the court system.
Repossession can be a difficult situation for both the debtor and the creditor. For the debtor, it can mean the loss of a valuable item that they may not be able to easily replace. For the creditor, it can mean added expense and time spent locating and recovering the item. Therefore, it is important that debtors keep up with payments in order to avoid this outcome.