What is Repossession?

The legal process of repossession occurs when the lending institute gets a court order that allows them to take possession of the property because of non-payment. The property is often a house or vehicle, but it can be anything of value.

If you have missed some payments, you will first be notified with a form letter. The letter will advise you to contact the lender to discuss both your situation and how you plan to make the payments that are in the arrears.

If the lender does not find your proposal satisfactory or if you continue to be in the arrears, you will likely receive a second letter stating that you must immediately clear up the outstanding debt or contact the lender immediately, or face immediate legal action and possession of the collateral.

The lenders will then go ahead and apply to the court for what's called a possession order to allow them to take the property they have as collateral. Repossession does not occur instantly. There is a legal process with several stages that must occur before the lender gets control of the repossession.

If it is your home that is facing repossession you will not only lose ownership but also the right of entry to the home. You could come home one day to find the locks changed and everything you own under lock and key.

If your house is repossessed, it will be very difficult for you to buy a home in the future. Repossession also affects your credit score, and your ability to get any form of credit.

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