KEYTAKEAWAYS
Discover the legal process of Repossession, where a lender reclaims collateral, such as property or assets, due to loan default, aiming to recover outstanding debt.
CONTENT
DEFINITION
Repossession – The Legal Process of Acquiring Collateral Due to Loan Default
Repossession refers to a legal procedure in which a lender, such as a bank, takes ownership of a property or assets provided as collateral when a borrower defaults on a loan. This action is typically carried out when the borrower fails to make agreed-upon payments or violates the terms of the loan agreement. The lender takes possession of the property to recover the outstanding debt, either by selling the assets or using them to offset the loan balance.
Repossession procedures vary based on local laws and the terms of the loan contract. Common examples include vehicle repossession when a car loan is in default or property foreclosure in the case of mortgage loans.
