If you owe money to a creditor, his options for collecting the debt are limited by the type of debt you owe. Most debts are not secured by property, so the creditor cannot take any of your property, even if he sues you for the amount of the debt. If your creditor's lawyer or a debt collector threatens to take your car, contact an attorney -- it is against the law for creditors to make empty threats when attempting to collect a debt.
Secured Debts
Some debts are secured by property. For example, if you take out a loan to purchase a vehicle, the loan is secured by your vehicle -- if you default on the loan, the lender can repossess the vehicle. In many states, if you refuse to allow the repossessor to take your vehicle, the lender must go to court to get an order of repossession. One the court grants this order, the lender can take your vehicle.
Credit Card Debts
You may use your credit card to pay your vehicle loan each month, but if you default on your credit card payments, it does not give the lender the right to take your vehicle. Credit card payments are unsecured debts; lenders cannot take property if you fail to pay these debts. Your vehicle and other property you pay for via credit card is therefore safe from repossession.
Threats
If a creditor threatens to take your vehicle if you don't pay a bill, that creditor may be in violation of the Fair Debt Collection Practices Act. The act says that creditors and debt collectors cannot make threats that they are not empowered to carry out, such as an unsecured creditor threatening to take your vehicle. In addition, debt collectors may not make threats they don't intend to carry out. For example, a vehicle lender cannot threaten to repossess the vehicle if he has no intention of doing so.
Legitimate Collection Activities
While unsecured creditors cannot take your property if you default on the debt, they can take legal action against you. These creditors can report you to the credit reporting bureaus for delinquency or can sue you for the amount of the debt. If a creditor wins a lawsuit against you, she can ask the court to garnish your wages or levy your bank account for the amount of the debt.
0 comments:
Post a Comment