if i have an unsecured loan, can that loan company then apply for order to reposess my property for arrears?

Question

we have an unsecured loan and have had a bad time recently as alot of other people, we called the loan company to explain and they were not at all understanding, we advised that all will be sorted by month end. They have now called saying they will be applying for an order to reposess our house, due to arrears. Can they do this if it is not secured on our house?

Answer 1

The only people that can repossess your house is your mortgage company, the government if you don't pay your taxes, and under some circumstances your homeowners association if you're behind on your dues. What this company is doing to you is illegal. They can't do it; they're trying to scare you. Send them a certified letter instructing them to not call you any more. They can call you only one more time, to tell you they received the letter and are complying with the terms. If this doesn't work contact your state's attorney general's office and the Federal Trade Commission. Good luck to you!!!

Answer 2

The company can not "repossess" something they do not own. That can only be done if the loan was secured to purchase that item (such as a house loan, car loan, etc), or if that item was used to secure the loan.

What they can do, however, is put what is called a lean on the item. This means that if or when you ever sell the property in question, the money that is owed will first be drawn from the sale of the house.

For instance, say you owe $40,000. The house & property are worth $100,000, but you still owe $35,000 on it. A lean is placed on it in the amount of $40,000. You sell the house for $95,000 at some point. First, the $35,000 still owed to the bank for it is removed from that amount, bringing it down to $60,000. From there, they remove the $40,000 to pay the lean, leaving you with $20,000 from the sale of the house.

Does that make sense? A lean can be placed (legally) on property owned by you in cases of unpaid loans, judgements against you by a court of law, etc. They have to file paperwork, though, and you are required to recieve a copy.

Once a lean is placed, the company you owe money to has the legal right to stop accepting payments from you. If they do that, then they do not have to change anything.

If they accept any payments from you, that has to be subtracted from the lean. Say they put the lean on the house, and you get a better job and are able to pay again. Every time you send in a payment, they have to re-do the paper work for the lean. Again, they have the right to refuse payment, though, which means they don't have to remove the paperwork.

I hope that helps clear it up some.

Answer 3

They're feeding you a line of bull$h!t. Unsecured loans are just that -- they are not secured by property the company can put up a lien against, like a house or a car. The only thing they may be able to do is have your wages garnished, and that is a lengthy process that involves going to court. As long as you are making a bona fide attempt to pay the debt they shouldn't be able to take any type of legal action against you, so send them a little something every month as a show of good faith and if they keep calling you then tell them you want all future communications to be in writing.

Answer 4

If youre in UK - First of all they have to send you a default notice, which most companies do after 2/3 months. then they have to get a county court judgement. You should get documents from the court about this which you need to fill in with income, expenditure etc and make an affordable offer of repayment per month. If your offer is accepted and you pay the amount each month they cannot take any further enforcement action. If they dont accept your offer, they may make one for a higher amount (which you can ask to be redetermined by the court) or they will get a forthwith judgement ie the whole amount of the loan payable at once. Based on this, they can then apply for a charging order - ie the loan becomes a secured loan. However at the charging order hearing, you can ask for the order to not be enforced on condition you make monthly payments. Very few judges will allow a house to be sold to repay a charging order if you can make regular payments. You can get help from your local Citizens advice or a free half hour with a solicitor (in most towns) to fill in all the forms etc. Most creditors overstate their powers and dont tell you your rights in order to scare you into paying.

Answer 5

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