Struggling to pay off one’s debt is difficult enough without the added concern of having something repossessed. Unfortunately, this is a major concern with which many people in Maryland are currently dealing. It may be helpful to address some of these worries by differentiating between which debts actually put people at risk for repossession, and which do not.
In general, repossession is a concern when falling behind on payments for secured debts. A secured debt is tied to a tangible or physical asset, like a vehicle, piece of furniture or property. If someone falls seriously behind on his or her car payment, the car might end up getting repossessed.
Unsecured debts are not necessarily linked to tangible items, meaning that there is nothing to repossess. Credit card debt is a good example of an unsecured debt. When someone falls behind on credit card payments, the lender will probably keep the account open and then add on late fees and interest. However, if someone falls too far behind on payments the credit card company could choose to sell off the debt to a debt collection agency, at which point there is a possibility of something getting repossessed.
Bankruptcy is an effective method of addressing both one’s debt as well as repossession concerns. This is because filing for bankruptcy immediately halts all collection and repossession efforts. This means that not only does bankruptcy offer immediate reprieve from problems that some Maryland debtors may be facing, but also provides a path to long term financial security.