What is a Repossession Notice?
Also known as a notice of repossession, a repossession notice is a document issued by a lender to a debtor regarding the repossession of property pledged as collateral on a loan. Laws regarding the repossession process vary from one nation to another, and sometimes between jurisdictions within a particular nation. While a repossession notice is often issued prior to the actual seizure of the collateral, there are some jurisdictions that do not require this action, but may require that lenders prepare and forward to the debtor what is known as a post repossession notification.
When issued in advance, a repossession notice normally informs a debtor that failure to maintain payments on the debt has led to the decision to repossess the property associated with the loan. Typically, lenders will attempt to work with debtors before taking this serious step, usually providing ample time for debtors to respond in kind and demonstrate some indication of bringing the debt current. Once those efforts fail, the notice is sent and recovery procedures commence. For example, if the debtor pledged a vehicle as collateral on a car loan and fails to make the monthly installment payments, the lender may declare the loan to be in default. At that point, steps to recover the pledged vehicle will begin, usually with the aid of repossession professionals.
Some jurisdictions do not require lenders to issue a repossession notice in advance. The assumption is that the debtor is aware of the debt and the fact that he or she is not complying with the terms of the loan agreement, and has failed to respond to any of the attempts of the lender to collect the past due amount. Once the amount of time required by local laws to allow the debtor to settle the debt has passed, the property or asset is repossessed at once.
A post-repossession notice is issued after the property has been collected and delivered into the hands of the lender. The content of this type of notice usually confirms that the repossession has taken place and offers the debtor terms for reclaiming the repossessed property. This typically includes paying off the amount that is in arrears, plus covering any costs associated with the repossession effort. Should the debtor fail to honor the terms in the post-repossession notice, the lender is free to sell the asset, recoup whatever amount possible from that sale, and then sue the debtor for any costs or expenses that remain outstanding.
@allenJo -- I once asked a real estate agent about this. He told me, “If it sounds too good to be true, it is. If it were that easy, everyone would be doing it.”
Clearly, don’t you think that realtors – of all people – would want to take advantage of foreclosed properties? Yes, there are ways to buy foreclosed properties but the people doing it are professionals, from what I understand, with substantial resources at their disposal. I think it’s a full time profession.
@hamje32 - Well, in general I agree with what you’re saying, but people do buy repossessed stuff. Think about foreclosures for example. A bank repossesses a house and then wants to liquidate it quickly.
It’s true that they are not going to sell it at a steep discount if they can afford to, but they do want it sold. You can find some sites that show you steps to take in buying a repossessed house.
I’ve never done it but if you’re savvy you can probably find good deals.
Sometimes on television you will see them advertise these so called money making programs where you can find repossessions for sale. The items advertised include cars and homes, often discounted at outrageous prices.
The idea is that there are auctions you can go to in order to bid and buy these repossessed items. However, buyer beware. If an item is being repossessed, the organization with first dibs on it is obviously the lender.
You would think this should be obvious to a lot of people but it isn’t. Why would a lender let a car go to auction rather than repossessing it themselves? At best, they can sell it used and usually fetch a higher price than you would find on the auction block.
I am not saying there aren’t good deals at auctions. But I would steer clear of trying to find repossessed merchandise.
One thing a lot of people don't realize is they can stop repossession of a car before it starts. I know a lot of companies will allow you to defer one or two payment to the end of the loan if you're having trouble paying.
I actually had to do this a few years ago when my area was struck with some really bad weather. I worked at a bar at the time, and the bar was closed for almost two weeks because of a bad snowstorm. Obviously I couldn't work during that time, so I fell behind on a lot of my bills.
Instead of waiting for a repossession notice, I called my car loan company and explained the situation. They deferred two months of car payment to the end of my loan and marked my account "current." It was a big help.
@JessicaLynn - I think a lot of people attempt to hide their cars when they get a repossession notice. And some of them do succeed. I think after a certain amount of time, they just stop looking for the car.
I kind of hate the fact that a car is considered collateral on a car loan. If you've had the car for half the term of the loan and you default, they can take the car away and you'll be left with nothing. Even after you've made half the payment! It just doesn't seem right.
@SarahSon - Interesting. I don't know that I would want to buy a repossessed home myself. I feel like it would have bad vibes or something like that. I don't know that I would want to benefit from other peoples misery at having their home foreclosed on.
Anyway, I've never received a repossession notice personally, but I had a friend who did. She was few months behind on her car payment, but she was trying to work something out with them. At one point she had the money to pay and went to the bank the car loan was through and they wouldn't accept her payment.
Eventually she hid her car at her moms house, and the bank accepted her payment when they couldn't figure out where the vehicle was.
My uncle works for a company who repossess cars. He does not have to go and physically repossess the cars, but there are some men in his company who do.
I know I would not want to be the person who had to carry out the repossession order. I would think you could get yourself in some interesting situations.
You never know how someone is going to react when you show up at their house or business to take their car. It's one of those jobs that would not be easy to do, but someone has to do it.
@andee - There are a lot of people who look for deals on bank repossessed cars and homes. The house we currently live in was one of those repossessed houses.
I don't know much about the story behind why it was repossessed, other than they were in way over their heads and could no longer afford the payments.
For us, it was too good of a deal to pass up even though I felt bad for the family who lost their home. Right now the market is saturated with repossessed homes for sale.
If you have the financial means to invest in some of these properties, you can really get some good deals. If you are handy at doing some repairs and fixing up, you can really come away smelling like a rose.
Thankfully I have never been in a position where I received a repossession notice, but can imagine it would be rather disheartening and discouraging.
My ex-husband was able to continue living in his house for a long time after receiving his first home repossession notice.
He received quite a bit of notice and had many chances to try and work out arrangements so he could keep his house.
He had lived there for almost 25 years, so he had some equity in it. He had quite a bit of other debt and no job at the time, so all of that added up.
I think it was over a year before he was finally forced to leave his house and the bank took it over. I know there are a lot of home buyers right now looking for deals on repossessed homes like that.
Some of them are in decent shape and others need quite a bit of work, but there are some good deals to be found. Something that turned out to be a bad deal for one person, ends up being a good deal for someone else.
I know the repossession laws are different in every state, but when my brother had his car repossessed, there was no warning.
Of course he knew he was behind on his payments and would probably lose the car, but there was no notice sent to him in advance.
Because he lost his job, he was no longer able to make the payments. Even if he had received some kind of advance notice, I don't know if he would have been able to work out payment arrangements.
When you don't have any money coming in, it is hard to be able to agree to something like that. He didn't even try to reclaim the car once it was repossessed because he didn't have any financial means of doing so.
Even though you understand the process, when it happens to you, it can be humiliating. My brother was already feeling down because of not being able to find a job and this made him even more discouraged.
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