Repossession or a foreclosure is one of the issues that you many people dread. You lose assets that are vital to you, and this might leave your family stressed and unable to know what to do.
Repossession also adds to the current debt, which will put more assets in jeopardy. A qualified asset protection attorney can help you avoid loss of your assets.
The stages of foreclosure are similar whether you used a boat, house or car to secure the loan. In every instance, you use certain assets as collateral. The lender expects you to follow the agreement towards repayment of the loan that you have taken.
If you fail to meet the agreement, the lender sells the collateral and uses to proceeds to meet the loan demands. If there is any surplus, it is yours. If you have a deficiency, then you continue paying for the loan till the debt is cleared.
So, how can you secure loans that will avoid repossessions and foreclosures? Here are a few tips:
Go for Loan Terms You Can Manage
The value of the collateral determines how much you get in terms of the loan. The lender negotiates agreements depending on the value of the collateral after liquidation plus any money that the lender can collect from guarantors of the loan.
When you opt for a loan, you need to understand that the lender will pursue every option to recover all their monies. You also should prefer a loan with low interest compared to the ones that have high-interest values.
Many lenders will be unwilling to renegotiate the loan terms, and instead opt for a more extended repayment period that will hold you captive for longer.
Protect Your Other Assets Before You Work with a Lender
Never go for a loan when you haven’t come up with a process to protect your assets. Remember that if you don’t repay the loan in full, the lender will come after your assets to collect the loan entirely.
Make sure the asset you use as collateral is part of the protection plan so that the lenders don’t come after you full force.
If you have an account with a bank and you apply for the loan, make sure you protect the funds as well. If you don’t, the lender will apply the funds in the accounts to the loan as they wish. Accounts from loan guarantors also stand the risk of being taken up by the lender.
Some lenders opt for more collateral then what you have offered. This is why it is ideal that you title a few other properties with the spouse.
Renegotiate the Loan Terms
When faced with repossession, sit down with an asset protection lawyer to see what option works for you before you meet with the lender. Here are a few options you can explore:
- Loan extension. Here, you agree with the lender to extend the loan period using new terms that will see that the loan goes for full payment. They know that even though the period will be more extended, they will be able to get the payment they deserve.
- Reduce the interest rate. This means the lender reduces the interest rate so that you pay less in terms of monthly premiums.
- Freeze the loan payments. This can be a hard proposition for the lender, but if the lender realizes that you are in dire financial stress, they can suspend the loan repayments. However, this can be a temporary measure for a specified period.
Refinancing your Property
This is a standard method to save the property from foreclosure or repossession. If you have enough equity in the home to allow for additional borrowing, you can decide to refinance the property so that the new mortgage can clear the arrears on the initial mortgage.
However, you need to be careful so that you refinance the mortgage with a lower interest one. For instance, why should you refinance a mortgage with a higher interest mortgage that will affect the cash flow further?
Work with Wealthy Partners
If your business is in financial trouble, you can work with wealthy investors to get it back up. Ask them to invest in the business for a share of the pie.
The Bottom-line
Repossessions and foreclosures put your family in trouble when it comes to securing your estate for the future. Make sure you follow these stages to reduce the likelihood of having your property repossessed or foreclosed. Ask your asset protection lawyer what to do depending on your situation.
