People do not need to file bankruptcy in New Jersey to lose assets in return for debt reduction or elimination. Creditors may sometimes turn to asset forfeiture to repossess assets. One of the most common assets that get seized in this way on behalf of creditors is motor vehicles. This usually happens after a person has fallen behind on payments for some time.
Credit Karma notes that a car repossession can hurt a debtor’s credit history in several ways. If the repossession occurred due to missed or late payments, these delinquencies may remain on file for up to seven years. Repossession does not necessarily cancel out debt, so the creditor may continue to make efforts to obtain the remaining funds. To do so, the creditor might either sell the debt to collectors or take legal action. The repossession itself may leave a scar on an individual’s credit history as the credit bureaus may note that it occurred.
According to NerdWallet, even if a debtor believes they know why a car was taken, it is important to ask. Even if that person has missed a few payments or paid late, the repossession may occur for another reason. One instance is that the driver may have failed to purchase an insurance policy within a reasonable amount of time, which may have been a requirement of the loan agreement.
If the creditor sells the car at an auction, then it is important to find out if any amounts are still due. If the creditor did not sell the car, it may be possible to get it back. Some debtors have been able to work out a new loan agreement. Other times, they are asked to pay the balance in full to reclaim the car. The terms may depend on the lender and the negotiation skills of the individual involved.
