Voluntary Repossession

Voluntary repossession is an expression representing what happens when the debtor decides to give back to the creditor the good he has bought with the money borrowed from his lender. This usually happens when the credit becomes default, that meaning that the borrower is not able to return the money to the lender and the credit can not be fully returned. Usually the loan becomes a default the very second day after one payment has failed to be made. The word repossession actually as defined by the dictionary means the action of regaining possession, the seizure of collateral by the creditor securing a loan that is in default.

Voluntary repossession differs in some aspects from non voluntary repossession. Non voluntary repossession occurs when the debtor refuses to make the monthly payment and also disagrees with having the good returned to the lender. In this kind of situation the procedure consists of several steps. After being warned several times of skipping the payment deadlines, the debtor is contacted in order to retrieve the good or guaranteed property depending on the contract he has signed with the creditor. If the debtor is not willing to return the good or property, the creditor can proceed with repossessing the good himself or with hiring a repo man or a company to perform this job for him. The hired repo man is trained in locating and retrieving the good in a professional manner, this meaning that he knows how to carry out his job without any breach of peace.

In case of voluntary repossession, the debtor takes the good or turns in the property documents himself to the creditor. Like this, communication is better facilitated and the debtor will know exactly what his terms and conditions are when he does this. With better communication between him and the creditor, there are higher chances of understanding what conditions are required from the borrower in case he would like to get his good back at some point after paying his debt to the creditor and if that is possible. From a financial point of view, the creditor has nothing to lose unlike the debtor if non voluntary repossession takes place. The debtor usually gains more if voluntary repossession occurs as there are no more fees and charges to be added to the debt he has towards the creditor.

All this considered, there is one more suggestion that should be made for the debtor. Whether non voluntary or voluntary repossession, the debtor has the obligation of knowing what he has signed with the creditor and clearly understand all the statements in the contract. Moreover, it is highly advisable for the debtor to check with the laws in his state to make sure the creditor will respect them even in case of voluntary repossession.

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