Here at Cibik & Cataldo, we want our clients and those who need answers to their questions, to understand, in layman’s terms, what is going on in their lives. That’s why we work diligently to make what can be quite confusing as understandable as possible. The laws concerning repossession are exceptionally complicated in some cases. Don’t worry! We’re here to help you navigate through this difficult time.
PA Laws Concerning Creditors and Repossession
If you owe money to a bank, finance enterprise, or a creditor, the credit entity likely has a security interest in some of your property. This security interest is called collateral.
Creditors’ Rights Involving Repossession
A creditor can repossess the personal property (collateral) if he or she does so peacefully. If a creditor arrives at your door to repossess your car, refrigerator, or any other item you have purchased on credit, you have the right to deny him or her access to the property. If a creditor attempts to come into your home or onto your yard, you have the right to tell the creditor he or she cannot do so. However, a lender does not need the owner’s permission to repossess a car that is parked on a public street outside of someone’s home.
If you have restricted the creditor from coming onto your home or yard to repossess the property, the creditor will be obliged to go to court and attempt to get the property back. This action will accrue more costs for the defendant (the party receiving the complaint). The plaintiff is the person bringing the charge against the party who is delinquent in paying.
Unless the defendant has signed a written security agreement that clarifies that repossession will occur if he or she does not pay, legal assistance must take place. If the creditor breaks any of these laws, the defendant has the right to sue the creditor in court.
Is a Warning that Property is in Danger of Being Repossessed Required?
Typically, no warning is necessary before repossession. There are, however, two situations that do require notice before repossession:
Non-Vehicle Personal Property
If you borrowed money to purchase personal property that is not a vehicle (i.e., furniture, outdoor equipment), the creditor must give you a 21-day notice before your property removed. This action provides buyers a chance to catch up with back payments.
A written 30-day notice from the creditor must appear before the creditor can repossess your mobile home. This notice gives buyers a chance to catch up with past payments. To further prevent repossession, the buyer must:
- Pay “back-payments.”
- Pay late charges
- Pay up to $50 for the creditor’s attorney fees
- Acquire insurance for the home (if the contract requires doing so)
- After 30 days, the buyer may have to pay court costs and attorney’s fees
Let’s Talk about Debt
Since we just mentioned the “written security agreement,” this is an excellent time to discuss the types of debt we see most often.
This type of debt has no assets supporting the debt. It usually occurs in the areas of:
- Medical bills
- Credit Cards
- Old apartment leases, and more
Chapter 7 Cases
If you choose to take care of your debt by filing a Chapter 7 bankruptcy agreement, the trustee will gather and sell the debtor’s nonexempt assets and use the money to pay creditors. There is more to this choice that we are happy to assist you with by calling our office for a free consultation.
Chapter 13 Cases
This type of bankruptcy move is known as a “wage earner’s plan.” It allows an individual with a regular income to create a plan for repaying all or part of the debts. This step is also quite complicated, and you will need assistance to follow all the “legalese.”
Secured debts that occur most often are for vehicles and houses. In these cases, the buyers put up some form of collateral. During the bankruptcy process, the automatic stay will keep creditors from taking the property. After the bankruptcy, you will have to reaffirm the debt to keep your house or vehicle. If you do not, the bank has the authority to keep your property.
No Discharge Debts
These debts include:
- Student loans
- Debts obtained fraudulently
- Child support debts
- Financial obligations related to a criminal case
- Some types of IRS debts fall into this category
We want to share with you all we know about repossession. Still, in practically every case, a knowledgeable and experienced attorney will need to be by your side as you navigate what can become something of a maze.
Tips for Avoiding Repossession
As upsetting as repossession can be, it gives you a chance to reassess how you spend your money and how to stay out of debt. This action can be accomplished by:
- Doing all you can to avoid getting in over your head financially
- Determining that you make enough each month, even if your salary decreases somewhat, to handle the payments on your vehicle or house
- Paying attention to the interest rate on your loan
- Letting the creditor know if or when you hit a rocky place with your budget (Creditors are humans. He or she may find a way to give you an extension of time for payment or possibly refinance the entire loan.)
- Remember, you will also need enough income to keep up maintenance and repair costs that you must pay regularly.
Contact Cibik & Cataldo
If you are facing foreclosure, bankruptcy, or repossession, Michael A. Cibik and Michael A. Cataldohave filed over 20,000 personal bankruptcy documents during their 35 of practicing law. When you are looking for legal help in the bankruptcy arena, Cibik & Cataldo offer compassionate and respectful guidance to assist you with what may seem to be problems with no solutions.
If you need assistance and you live in and around Philadelphia, contact the law offices of Cibik and Cataldo today for a free consultation. It’s time to find your way back to financial freedom.
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Cibik & Cataldo
1500 Walnut Street Suite 900
Philadelphia, PA 19102