Respossession

Information about what to expect and how to deal with repossession of property

Repossession involves the lender (usually through a repossession agent) taking property that has been secured to a loan when you fail to pay money owed or don't keep to other terms of a credit contract, agreement such as:

maintaining the property to a suitable standard (eg keeping a car registered and insured; carrying out any needed car repairs within a reasonable time);
informing the credit provider where the property is; and/or
obtaining authorisation from the credit provider to sell the property.

Default notice

Under the terms of the Consumer Credit Code, repossession can usually only go ahead if:

the property has been pledged to the credit provider as security for payment of the loan; and
you have received a default notice (or repossession notice).

The default notice must state:

why the repossession notice has been issued;
that you have 30 days as of the date of the notice to pay the overdue amount; and
that if you default again in the same way during the 30-day period, repossession will take place after the 30-days have expired, unless this default is also rectified within this time.

However, a credit provider is authorised to repossess property without issuing a default notice if:

you have committed fraud;
you are unable to be contacted;
you have destroyed or hidden the property (or intend to); or
the lender has obtained a court order which authorises an immediate repossession.

The credit provider is not permitted to repossess or arrange repossession of property when less than 25 per cent or $10,000 (whichever is the lesser) of the amount borrowed remains to be paid unless the State Administrative Tribunal rules otherwise. However, this safeguard does not apply if you have destroyed or hidden the property (or intend to).

Entering residential premises to repossess property

Lenders and repossession agents working on behalf of lenders are not allowed to enter your residential premises to repossess property unless:

you have given written consent to the lender or repossession agent to enter your premises and repossess your property; or
the State Administrative Tribunal has ruled that the lender or repossession agent can enter your premises and repossess your property.

Bear in mind that neither your permission nor a Court Order is required if the mortgaged goods are not on private property. That is, if a mortgaged car is left parked on a public street, the credit provider has the right to simply drive it away without asking you.

The Criminal Code also provides that it is an offence for a debt collector, without lawful excuse, to enter your property without your permission or to continue to remain on your property once you have requested that they leave.

Stopping repossession

Prevention is better than cure! If you start falling behind in your payments, or think you are going to:

contact the lender to explain the situation; and
contact a financial counsellor.

If you can prove that you have a fair chance of getting your financial affairs back on track, you may be able to prevent your goods being repossessed by writing a letter to your credit provider requesting that they postpone repossession.

If your credit provider is not willing to accept your proposal, you can apply to the State Administrative Tribunal for assistance. If the Tribunal decides that there is a reasonable prospect that you will be able to meet your financial obligations in the foreseeable future, it can order the lender or repossession agent to hold off on repossession.

If repossession cannot be deferred, you may want to voluntarily give up your property to the lender so as to save paying the fee associated with recovering it.

If you are unsuccessful in stopping repossession, all is not lost. You still have a chance to retrieve your property.

Notice After Repossession

A lender or repossession agent who has confiscated your property must send you a written Notice After Repossession (within 14 days of the repossession), which states:

an estimate of the value of the property which has been repossessed;
the lender's expenses involved in repossessing your property and any related expenses; and
your rights and obligations.

21 days grace

Property that has been repossessed cannot be disposed of or sold until 21 days after the date of repossession. This gives you an opportunity to find the money to pay the outstanding amount owing on your account and to pay the lender's repossession expenses. It also gives you time to apply to the State Administrative Tribunal for assistance.

However, the property can be sold as soon as it is repossessed if the lender has a Court Order permitting such action.

Buying the property back

If you are unable to pay the outstanding amount owing and the repossession expenses, perhaps one of your close friends or relatives would be willing and able to buy the property at the price outlined in the Notice After Repossession.

Of course, if the lender receives a higher offer than that set out in the Notice, they will likely take this offer.

The sale of your property

If your property has been repossessed and you are unable to retrieve it (whether by paying the outstanding balance on your account or finding a buyer), the lender must sell the property:

as soon as is reasonably practicable; and
for the best price reasonably obtainable, namely the 'retail price'.

When your property is sold, the amount for which it is sold will be deducted from the amount you owe. If the sale raises more money than you owe, you will be paid the difference. However, if the sale fails to raise enough money to cover the full balance, you must pay the shortfall.

For more information, see When the Repo Man Comes.