What Are Repo Companies Allowed to Repossess in Pennsylvania?
When someone falls behind on their car or truck payments, the thought of repossession usually enters their mind. Repossession occurs when a lender exercises its legal rights to take the property back that was used as collateral to secure a loan. Once you default on the loan, even if you are only one day late, a lender typically has the right to repossess the property.
Nonetheless, strict laws govern what actions a creditor is allowed to take and what type of property could be repossessed. Most people understand that their car or truck could be repossessed. However, this extends to any vehicle, such as a motorcycle, ATV, boat, RV, or even a private plane. It also includes rent-to-own items, such as furniture or appliances or any personal property you contractually pledged as collateral to secure a debt. This does not include items purchased with a credit card.
Falling behind on your bills opens up a wide variety of legal actions that could be brought against you, including repossession or a collection lawsuit. At Young, Marr, Mallis & Deane, our Philadelphia bankruptcy attorneys are available to help you find firm financial footing. Bankruptcy is a tool that could prevent creditors from acting and improve your economic condition. Call (215) 701-6519 to see how bankruptcy could benefit you.
What Can Be Repossessed in Pennsylvania?
If you are late or miss a few payments for secured debt or fail to comply with other terms in the loan agreement, you are in default. For example, you could default on a car loan by missing monthly payments or allowing your auto insurance to lapse. If this occurs, your lender has certain legal rights, including repossessing the vehicle.
Vehicles Can Be Repossessed
Nearly every auto loan gives the lender the right to repossess the car if the purchaser defaults on the contract, either through missed payments or failing to comply with a provision included in the loan agreement. This right extends to any vehicle purchased under a loan agreement. For example, you could lose a motorcycle or truck if you fail to make the required payments. Luxury items, such as boats and planes, are not immune to being repossessed if the owner does not keep up with their payments. Lenders are not required to provide notice that they intend to take a vehicle.
Rent-to-Own Items Can Be Repossessed
Many people in Pennsylvania will rent an item with the option of eventually purchasing it in the future. For example, someone might rent living room furniture with the intent to buy or enter a similar agreement for an appliance. Typically, these agreements allow a person with poor credit to take possession of an item for a low monthly price.
Unlike a vehicle, a lender is not permitted just to enter your home and take an item. They must obtain a court order to do so. However, if the item is in plain view and accessible without entering a locked area, the property is fair game. For instance, if you have outdoor furniture on your front porch, a lender could repossess it without a court order.
Collateral Property Can Be Repossessed
Any personal property used to secure a loan could be repossessed if you default on the loan terms. This occurs much less frequently but is still possible. Most lenders will not accept the personal property as collateral.
For instance, you might use a truck that you own to secure a new business loan. In some cases, equipment used for the trade could also be used as collateral to secure the loan. If you default on the loan, your lender has the right to repossess any property that was offered as collateral. If you have any questions regarding your loan agreement, contact our Pennsylvania bankruptcy lawyers.
Real Property Cannot Be Repossessed
Your home, even though it is collateral for your mortgage loan, cannot be repossessed. There is a different legal process known as foreclosure. While some people might refer to losing a property to foreclosure as repossession, it is a very different and much more complex legal process. Any real property must be foreclosed on for the lender to take possession, including your home, a vacation home, rental property, or even a plot of land.
How Repossession Works in Pennsylvania
Your lender has a right to repossess your property if you default on the loan agreement. However, there are restrictions on what a lender is permitted to do. First, a repossession company is not allowed to breach the peace. This means they are not allowed to use violence, threats, or enter a secured area to take your property. For example, a repo company is not permitted to break into a garage to take a motorcycle. However, they could take a barbeque that is on the front lawn and not secured by a fence or chained down.
Lenders are not required to provide you notice that they intend to repossess the property. However, you must be notified once the property has been taken, including information on redeeming the property and the location where the property is being stored. If you have any questions about the repossession process, contact our Montgomery County bankruptcy lawyers.
Our Pennsylvania Bankruptcy Attorneys Can Help You With Repossession
The experienced Allentown bankruptcy lawyers at Young, Marr, Mallis & Deane understand the stress associated with past due payments and the threat of repossession. Filing for bankruptcy could help you manage your monthly payments, discharge certain debts, and keep property from being repossessed. In other cases, if you are unable to keep a vehicle or other property, filing for bankruptcy could free you from a deficiency judgment or other collection lawsuits. Call (215) 701-6519 to review your unique circumstances and options.
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