If you have failed to pay your bills on time or you are running behind on payments for your credit card, calls from collection agents may be an unfortunate frequent occurrence.
Typically, the collection agent’s job is to try their best to make you pay up as soon as possible.
Towards this end, they might be telling you that the item that you purchased and have not yet fully paid for will be seized in lieu of payment.
The question is, is this legally allowed?
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Can they really take away personal property from your home because you owe money on it?
There are two things to consider here:
1) Is it legal for collection agents to seize property in this manner?
2) Is it viable for them to do so?
Is it legal?
Before a creditor can repossess any property that belongs to you legally, they need a court order permitting them to do so.
To get the court order, the agency needs to go to court, tell a judge why they are justified in doing so.
It’s not an easy task at all and it may be quite time consuming as well.
Also, there are costs involved in this.
In short, the creditor expends more time and effort here.
The other equally important thing that the creditor needs if they wish to seize your personal property is a document signed by you at the time of making the purchase stating that you agree to let them place a lien on the particular item.
That is, if you purchased a laptop by taking out a loan, you must have agreed at the time of taking out the loan that the lender can place a lien on the device that will come into effect if you fail to pay the loan back.
If you haven’t signed such a lien, the creditor/ collection agency has a really tough time seizing your property.
Is it viable for them to do so?
The question of viability is even more significant.
Let’s assume that you have purchased your new couch on a loan and you have not paid it off.
Now, to seize the couch, the collection agent will have to hire some people to cart the couch out of your home and to their premises.
They will also need a truck to carry it to wherever they need to take it.
Hiring a truck, two men to seize your property is going to result in quite a bit of expense that might not in the least be viable for the agent to undertake.
Even if they overlook that and still take the couch away, the resale value of a second hand couch is too low for it to be worthwhile to undertake all of this.
The creditor could end up losing more money on the whole process than he stands to lose if you fail to pay up.
Instead, if he simply gives you more time, there is a chance that he may recover the loan amount partially or even fully, in time.
These are the reasons why seizing your personal property is not something that creditors are likely to do or something they prefer.
While you may have collection agents threatening you with this in a bid to convince you to pay, the chances that they will actually repossess the property are very low.