Repossession is a term that refers to the fact that the creditor claims the good you have bought using the loan you as a credit consumer got from him. Repossession is quite a hard measure of recovering losses that the creditor resorts to because the debtor refuses or is unable to keep paying back and clearing the loan account.
The moment when repossession occurs comes usually after several warnings and a grace period. If nothing has been achieved after these minor measures taken against the creditor, the last solution for recuperating money is the repossession itself. This can be done either voluntarily or non voluntarily by the credit consumer.
If done non voluntarily, repossession should follow some rules and respect the laws of the state where it occurs. There are some very clear specifications referring to the procedures of repossession which if not followed can bring along negative implication on the part of the creditor of the repossession company. The most important one has to deal with not breaching the peace. The repossession company is not allowed to cause any damage to the property or the good while carrying out its task. In some states, even taking a vehicle from a closed garage can be considered breaching the peace. In other states, repossession is not even required by law, but only by the contract the creditor and the debtor have signed.
If the repossession is done voluntarily, then there is some gain for the credit consumer in that he will not have to deal with the extra charges for repossession and storage of the good. Sometimes, in case of non voluntary repossessions, the keys of cars can not be recuperated and the cost of making a new set of keys will be at the expense of the credit consumer not the lender. So if the debtor realizes there is no other way out of his financial strains but to repossess the good, it is wiser and financially safer to agree and take the good back to the creditor himself.
Another aspect of repossession, still negative, is that once repossession is carried out, the debtor name will be entered on a black list of debtors that will prevent him from making future loans and mortgages, or contract credit services from banks and financial institutions. Even if the repossession is done voluntarily, the creditor may still report repossession on the loan and destroy the debtor’s chances to future loans.