With so many families struggling just to buy gas to get to work and groceries for your family, there is all likelihood that the worst-case scenario will hit many. Repossession due to the lack of funds to keep up with bills can be embarrassing process but one that many people may face with the state of the economy and the lack of good paying jobs.

When people are being faced with collection agencies and incessant calls, they often do not know what is possible and what is not. They can be threatened with repossession and lawsuits so they will often avoid contacting creditors altogether, making the situation worse.

Here is some information about repossession and what can legally happen.

What Can Not Be Repossessed

Items Purchased Using an Unsecured Loan

If you fail to pay back a credit card balance or a unsecured loan, such as a payday type loan, the company can not repossess any property you purchased with the money once you default on that loan.

Property Not Used As Collateral

If you have not used property or possessions as collateral on a loan, those possessions can not be taken away. Only things that have been listed as collateral on a secured loan are able to be legally repossessed.

Credit Agreement Collateral

If you use property as collateral on a credit agreement, there may be a loophole. An attorney can review credit contracts and in some instances, they will find that the contracts are not enforceable due to your state’s legal statutes. If the attorney can find such cause for voidance, then your collateral property may be saved from repossession.

What Can Be Repossessed

A Vehicle

If you default on your loan with your lender for car financing, the lender has the right to repossess you automobile and resell your car to recoup their loss. Additionally, to add insult to injury, if you fail to make your car note and the lender repossess your car, they can also come back after you for any balance left over should the car sell for less than the price you owned on your loan. Essentially, you will still be paying for a car you no longer have.

A Home

When you use a mortgage to finance a home, you are essentially using that home as your collateral. If you default on your home mortgage loan and foreclosure happens, you can lose your home back to the lender, who can legally evict you and resell your home to recoup their money.

Rent-To-Own Merchandise

If you go to a store that rents merchandise for a fee, with the end result of ownership, the items can be repossessed if you fail to make the arranged payments.