Know your rights before you hand over your keys
In the current economic down turn many good people are struggling to manage with the increase in bills and a decrease in income. The harsh reality is that many people are falling behind with their monthly payments on credit cards, store cards, bond payments and car installments.
Credit providers will take steps as soon as they find that the customer cannot keep up with payments as per the credit agreement. When the customer misses the first payment, the credit provider will contact the customer to find out why the payment was missed and when payment will be made to bank/credit provider. Credit providers of cars are more aggressive in collecting arrears than credit on property.
The customer will get an opportunity to make arrangements to pay the arrears when the creditor calls. The creditor will continue with legal action to repossess car, if the customer cannot make an arrangement with creditor to repay arrears. The creditor will continue contacting customer and continue with legal action to repossess car.
====> Consider Debt Counselling to stop Repossession <====
The credit provider will always give the customer the opportunity to voluntary surrender or ask the customer to do a voluntary repossession of the car. ‘Voluntary repossession’ is an agreement between the buyer and the seller. It allows the seller to take back (repossess) the goods without having to get a court order, because the buyer agrees to this.
The advantage to the customer is that the customer will not have a judgement against his name for 5 – 10 years after the voluntary repossession. A judgement against a customer’s name will have a devastating effect on the customer’s credit record and ability to get credit again in the future.
The advantage to the bank or credit provider is that they have nothing to lose with voluntary repossession. The customer hands over the car and the bank will auctions the car to recover outstanding debt as soon as possible. Any shortfall is charged back to the account of the customer. The customer will have to make arrangements with the bank to repay shortfall.
By the third month the creditor will ask the customer to hand over the car or repay the arrears immediately or do a voluntary repossession. In the fourth month the creditor will hand over the case to an attorney to collect arrears or take further legal action. The attorney will normally find a debt collector to trace customer and collect arrears or car. If the attorney or his debt collector cannot collect the arrears or the car, the attorney will proceed with repossession.
The attorney cannot repossess a car without a court order. Before the car can be repossesses the attorney must send the customer a written warning. The warning will give the customer 30 days to pay arrears or hand over the car. The creditor will normally be negotiable in how the arrears are paid back. The creditor normally wants to avoid expensive legal action and will be willing to work with customer.
If the customer is unable to repay the arrears in 30 days, another letter will be sent giving the customer a further 14 days to pay arrears. If no arrangement is made by customer with credit provider the attorney will get a court order to repossess car. The customer will receive a summons from credit provider. The customer can go defend himself without an attorney, but he must explain why he did fall behind in payments.
The court will hand a judgement down on customer if the customer is guilty. The judgement must be in place before a credit provider can repossess the car. A court official will be responsible for the repossession. This is normally the Sheriff of the Magistrate Court that will do the repossession. The Sheriff will have to show you the judgement before the car can be repossessed. The customer must give the Sheriff access to property or garage to repossess car.
The credit provider will keep goods or sell the car on auction to recover arrears. If there is a shortfall on account after sale of car, the customer will be kept liable for shortfall. The credit provided can now get a second summons to repossess other goods of customer to recover shortfall.
What to do next:
Avoid the repossession of your car and apply for debt counselling. As soon as you apply for debt counselling all legal steps must stop. Read more about debt counseling here: Debt counselling
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