Repossession is, in terms of financial law stating that if a debtor of a certain property is not able to re-pay a loan fully over a certain period of time; or not being able to keep up with the installments on time for over a certain period, will have the debtor’s property being repossessed back by the creditors.

The debtors whom are on a mortgage loan hold possession of the property, provided they manage to keep up with their installments. Once the debtor misses more than a few payments, the creditors can base on the mortgage or hire purchase agreement to retake possession of the property.

This however is a form of creditors taking possession of the property and is possible to sell it off and use the proceeds to cover up the total amount of debts that the borrower owes. The good thing about it is that any balance after the successful sales will be returned to the borrower so that at least he or she is cleared of debts and the creditor has taken back what they expect to receive.

Different than foreclosures which usually involves court order that allows the creditor to retake the property, sell it and keeping all the proceedings, repossession can be advantageous to the borrower because the financial institution can choose to sell and not auction it off at a lower than market price, so at least the borrower can still get a good price that if the property has appreciated over time, he or she can still have some money left after being able to shake off the debts.

To sum things up, repossession does not require a court order, but it is needed in a foreclosure. It is at least a more humane solution to help debtors settle their debts rather than putting them homeless.

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