You have some options for handling repossessions and foreclosures

On Behalf of | Jul 11, 2021 | Foreclosure

With houses, cars and other items seemingly costing more than ever, it may be impossible for you to pay cash for major purchases. Fortunately, if you have a good credit score and meet other requirements, you may qualify for a mortgage, car loan or personal line of credit. 

When you finance a home, farm or car, you typically use the item you are financing as collateral. If you miss payments or default on the loan, you may face repossession or foreclosure. You probably have some options for stopping these processes, however. 

The automatic stay

Harassing collections activities are some of the more frustrating aspects of repossessions and foreclosures. If you pursue bankruptcy protection, though, you likely benefit from an automatic stay. During this stay, which typically happens as soon as your file for bankruptcy, creditors may not continue to contact you. They also may not move forward with foreclosures or repossessions while the stay is in effect.  

A repayment plan

Depending on the type of bankruptcy protection you pursue, you may be able to come up with a debt repayment plan. If you do not fall behind on your payments during the plan period, it is unlikely your creditors can proceed with foreclosures or repossessions.  

An end to your bad loan

If you have little interest in keeping your home or vehicle, bankruptcy may also allow you to get out from under an oppressive mortgage or loan. That is, in exchange for giving up certain assets, you may no longer have to comply with the terms of your agreement.  

Bankruptcy can be a complicated matter. Ultimately, though, if you are struggling to pay your mortgage or car loan, exploring the advantages and drawbacks of bankruptcy may help you maintain some control over foreclosures and repossessions.