What is a Repossession of Property?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 June 2018
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Repossession of property is a term used to describe the seizure of property, such as cars, furniture, or even real estate, to cover unpaid debts. Repossession of property can occur if a person making payments to a seller defaults on the payment plan, or if the property has been used as collateral on a loan or line of credit that has defaulted. Many regions have specific laws regarding repossession of property; it is important to examine local laws and guidelines to be sure of applicable rights and responsibilities.

It is important to understand how a person can default on a loan or payment plan. The most common reason for default is not making payments on time or in full. This can lead to repossession of property in some cases, but it is often possible to work out an agreement with the lender if the lapse is due to a temporary issue or simple mistake. In some cases, default can occur if a person doesn't maintain other contractual agreements, such as not having insurance on a financed vehicle. Read lease and lending agreements carefully before signing, and be certain to compare them with local laws to make sure the agreement is both valid and fully understood.


Foreclosure is a type of repossession of property. When taking out a loan for a house, the property and the home often serve as the collateral for the loan. A home loan lender may repossess the house if mortgage payments are not made. In the sub-prime mortgage crisis that began in the United States in 2006, many people faced repossession of property as a result of vastly increased interest rates on home loans and falling home prices. Unable to refinance their homes, many people that had taken adjustable rate mortgages were evicted due to foreclosure.

Rent-to-own items or those on a payment plan are often subject to seizure if payments are not made. These items are generally smaller objects, such as furniture, appliances, or electronics. In some areas, prior notice before repossession is not required, so it is important to keep accounts in order to avoid repossession trucks arriving without warning. Check local laws carefully, however, before allowing anyone to repossess furnishings or rent-to-own items. In some areas, a court order may be required to allow seizure, and in no jurisdiction are repossession workers allowed to harass, threaten, or attempt to break into a property to seize the items.

It is important to remember that repossession of property does not always amount to paying off a debt. If a car is repossessed, the lender may then attempt to sell the car to make up the money lost. If the lender cannot sell it for the total amount of debt, the person from whom it was seized is still responsible for the difference. This can also happen with homes, making people who have been evicted responsible for the difference between what the property is sold for and what is owed on the mortgage.



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