Because repossession is a very complicated business, there are a lot of repossession laws governing it. To many property owners who have taken a loan with property as collateral, the news of an impending repossession comes as a bolt from the blue. Sometimes life circumstances have caused the borrower to unwittingly fall behind, putitng them in very a bad position. Once you understand that the possibility of repossession is real and impending, that’s the time to rouse yourself and immediately familiarize yourself with repossession laws…most likely also contacting a professional.
Repossession laws are different for each state…however, the basic tenets are generally the same. Similarly, there are different laws for different kind of properties. For example, land cannot generally be repossessed without a grace period. And, if within this grace period, you clear all the pending payments till that date, the original owner keeps the land. The repossession laws also provides for you the option of arranging for a third party credit insurance agency to make your regular payments in case you are unable to make payments for a certain period of time (a period between two jobs or in case of a sudden illness, for instance). In such a case, you can talk to your creditor and come to an agreement on the period of non-payment. However, if you fail to do that and just decide to avoid payments without any communication, you are giving your creditor a free hand to initiate repossession proceedings.
There are also repossession laws that do not allow the creditor to indulge in “breach of peace” while repossessing the concerned property. This means he cannot enter property without your consent, he cannot break into a locked garage to repossess a car and cannot commit other such acts that would be a “breach of peace”.
You should also be informed of repossession to save yourselves from further expenses after repossession has happened. If the property repossessed is auctioned off and the money obtained does not cover the pending loan payment, you may be required to cough up the extra sum, as well. Sometimes, the creditor purposefully auctions off a property for a very low amount to extract more money from the debtor. You must be aware of this possibility and keep close track of what happens to your property after the repossession.
Repossession laws cannot be discussed in compete detail as they vary from region to region. Your best bet would be to consult a lawyer or educate yourself by searching relevant websites or referring to books on repossession laws.