Brief guide to repossession

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Repossession is generally used to refer to a financial institution taking back an object that was either used as collateral or rented or leased in a transaction. Note that repossession is a "self-help" type of action in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings.

This is usually done in accordance with a purchase contract or credit contract, in which the consumer agrees that the seller (the "lienholder") may repossess the object if the signers are past the grace period (generally for prime lenders the critical number is 30 days late making an instalment payment but can vary based on how many payments have already been made, the length of the business relationship, reason why past due, etc.). Contracts that authorise repossession also usually specify additional fines that the consumer must pay to the seller, ostensibly to cover the seller's costs of the repossession and of depreciated value of the object, as the seller is now in possession of a "used" object. Generally lending institutions never want to repossess because the items sold at a wholesale auction and were financed at retail price, hence, a loss is virtually guaranteed. However, the statisticians and accountants have determined that any loan which goes beyond 90 days past due will never again become "current" (up to date on payments) and the collateral continues to depreciate.

Repossession is a complicated and legally fraught matter, with legality being determined by widely varying local and state laws. In some jurisdictions, such as the United States, a consumer may avoid repossession of some of his property by declaring personal bankruptcy, throwing his financial arrangements on the mercy of a court, which will usually prevent the consumer's house and, sometimes, his car from being repossessed. Both repossession and bankruptcy are significant negative events on a consumer's credit report.

If a lender finds itself in the situation of needing to repossess property while the borrower attempts to avoid this, the dealer may contract the work of repossession out to a repossession agent. Agents appointed by the courts are called bailiffs.

As an unusual provision of law, when repossession takes place, the lienholder has a non-delegatable obligation not to cause a breach of the peace in performing the repossession, or the repossession will be reversed, and the party ordering the repossession will be liable for damages (this provision is unusual in that where a duty can be delegated to an agent, usually the agent is responsible for the misconduct, but the principal who hired the agent is not responsible for the agent's misconduct). This requirement means that whether a repossession is performed by the lienholder or by an agent, the repossessor must not cause a breach of the peace or the lienholder will be held responsible. This requirement not to breach the peace includes even if the breach is caused by, say, the debtor objecting to the repossession or resists the repossession.

If you have mortgage arrears or are facing repossession one of the best options is to organise a quick property sale. Properties direct ltd have the in-house resources and funds to stop repossession even if you have been sent an eviction notice (possession order).

If the bank does repossess your property, you could still be left with negative equity because the sale price they accept might not cover the outstanding debt. The bank will sell the property as quickly as possible to reduce any loses this is typically far less than the market available of your property.

They can buy your property and guarantee a quick sale. This will avoid the uncertainties of the housing market, stop repossession and ensure you receive a fair value for your home. If you would like more information about a quick property sale to avoid repossession, why not contact Properties Direct ltd.

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