When you ask a person why their car got reposed or their house was foreclosed, here are a couple of things you may hear. I got laid off from my job. When my wife lost her job, we couldn’t make it on one income. Unfortunately, most people never ask themselves the following questions. I am single, what will happen if I lose my income? If my husband loses his job will we still be able to pay our house note?

I call this what if budgeting. A lot of people think that this kind of budgeting is either negative or it means that they don’t have faith. What if budgeting is not worrying about how life could get bad. It is a simple way to check to see if you can still keep your same life style if your income is lowered. 

Let’s look at a typical repossession. Every year thousands of repossessions could be avoided if people did one thing. That one thing is to call their finance company and talk about their financial situation. I have had a few people tell me how they did this and were able to keep their cars. A lot of other people told me their solution was to park their cars in their garages or switch cars with their spouses to stay ahead of the repo man.

Just when they think that the finance company won’t get them, they go back to their old ways and get their cars reposed. Now here is the catch. Depending upon the circumstances, a repossession might happen from two months to up to half a year. The length of time it took to repossess a car is not listed on the credit reports. Once a car is sold off, there still may a balance owed. In a few days we will discuss this further in part 11.