Repossession
Taking back collateral (e.g., vehicle) when the borrower fails to repay.
Detailed Description
Repossession
What is repossession?
Repossession is the legal process where a lender takes back an asset from a borrower who has defaulted on their loan agreement.
What are common causes of repossession?
Common causes include missed payments due to job loss, medical expenses, divorce, or taking on too much debt.
What types of assets can be repossessed?
Assets that can be repossessed include vehicles, homes (through foreclosure), and retail items purchased on credit.
How does repossession affect credit scores?
Repossession can significantly lower a credit score by 100 points or more and can remain on a credit report for up to seven years.
What rights do borrowers have during repossession?
Borrowers typically have rights such as notification before repossession, the right to cure the default, and protection from unlawful repossession methods.