As a consumer, it is your responsibility to maintain timely payments on your debts. If you get behind on your payments of a secured debt, your creditor does have the right to take certain actions. However, you also have rights that could protect or resolve your asset from being repossessed.
You vs. Them
Secured debts are tricky for one reason, the asset you are indebted to is used as collateral. For example, in a car loan you are making payments to the creditor that lent you the money to purchase the car. If you get behind on payments, your loan agreement states that the lender has the right to take the car in order to satisfy the debt owed. As per the loan agreement, you and your creditor both have certain rights. However, there are certain actions you can take in order to prevent or resolve a potential repossession.
- Make Timely Payments — do not default on your loan payments
- Contact Your Creditor — attempt to modify the terms your agreement if you feel you may miss a payment
- Get It In Writing — obtain written approval if approved to make your payment at a later time
- Sell The Car — get out from under a sinking loan by selling your car and paying off the creditor
- File For Bankruptcy — if you are experiencing a significant financial hardship and cannot afford to repay your debts
Remember that your rights are best upheld when you act quickly. Waiting until you have missed several payments could hinder you from obtaining a deal that prevents repossession.