When you enter into a credit contract, some items may be listed as security and may be repossessed if you do not make your loan repayments.
If you default on your loan, the lender has a choice to either issue proceedings and continue to charge interest and fees or they can repossess secured goods – this freezes the amount owed under the loan. They can’t repossess and continue to charge interest and fees.
- What is repossession?
- When can a lender repossess your property?
- Know your rights
- What happens after repossession
What is a security interest?
- beds and bedding
- cooking equipment including stoves
- medical equipment
- portable heaters
- washing machines
- travel documents
- identification documents
- bank cards.
- they have a “security interest” in the property they want to repossess, and
- those items are specifically described in the loan contract, and
- you are behind on your loan payments or the secured property is “at risk” (see below).
When can your items be considered “at risk”?
What items can be repossessed?
- your property is not damaged during the process
- any property that is repossessed is adequately stored and protected
- the right to enter your house or flat is not exercised unreasonably.
Warning about repossession
What if I have applied for hardship?
When can they enter my property?
- If your lender wishes to seek your agreement to enter your home outside the permitted times, your lender must approach you within the permitted times – ie, between 6am and 9pm Monday to Saturday.
- Your lender can only ask you to agree to entry outside the permitted times if you have already missed a payment.
Forced entry to your property
Information you must be given
- A copy of the repossession warning notice (you will not get this if your property is being repossessed because it is “at risk”).
- A copy of your loan contract.
- A copy of the lender’s licence or certificate.
- If an agent is carrying out the repossession on behalf of your lender, proof that they have your lender’s authority to repossess the property.
- A statement with the address of the house or flat being entered, the date of entry, and a list of items to be taken.
- A statement of your rights following repossession of the property and your rights to make a complaint about the lender’s conduct.
- A copy of your consent if you have agreed to the repossession happening after-hours.
Voluntary surrender of property
- For loan contracts signed before 6 June 2015, your lender will need to consent to accept delivery of the property if your loan contract does not allow for it.
- For loan contracts signed after 6 June 2015, you can choose to deliver the property to your lender at the place stated in your repossession warning notice.
- the date of the repossession
- a list of things that were taken and an estimate of their value
- what you need to do if you want to get your property back
- what will happen if you do nothing – your property will be sold and you will be liable for the difference between what you owe and what the property is sold for (after expenses are deducted). Alternatively, if there is money left after your loan is paid off from the proceeds of the sale, you will get a refund.
How can I get my property back?
- You can reinstate your loan by paying any overdue amounts (only the amounts that are in default, not the entire loan) and meeting any other obligations (including paying the lender’s reasonable costs of repossession action) so that the loan is no longer in default. Once the loan is reinstated, your lender must return the repossessed property to you. Then the loan will continue as if the default and repossession never occurred.
- You can settle your loan by paying back the balance of the loan, doing anything else that you need to do under the loan contract (for example insuring the property) and paying your lender’s reasonable costs of repossession action. Once the loan is settled, your lender must immediately return the repossessed property to you and the loan is ended.
Selling the property
- the price your property was sold for
- the lender’s costs for selling your property
- the amount left to pay on your loan at the time your property was sold
- the amount left to pay if there is a shortfall between what your property was sold for (minus the sale costs) and what you owed
- if your property sold for more than you owed on the loan, the amount the lender owes you (minus the sale costs).