If you fall behind on payments for a secured loan, or hire purchase agreement, then your creditor can repossess your property and sell it to cover what you owe.
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Reasonable and ethical treatment
Your creditor – the person or company who loaned you the money or issued the hire purchase agreement – must treat you and your property reasonably and ethically. They can’t take, or threaten to take, property which isn’t listed as security. If they do repossess your property they must try not to damage it or anything else you own, adequately protect the property while they have it, and enter your home in a reasonable way. (So they can break in, but not destroy your door.)
If you’re facing repossession, come talk to us about ways you may be able to avoid it – we can help you deal with your cashflow issues and catch up with payments. But it’s important that you act early, when you have less to pay.
The repossession process
Creditors must follow a prescribed process when they’re repossessing property. This includes issuing a warning notice that you are facing repossession at least 15 days before they do repossess, which gives you the ability to rectify what you owe and keep the property, or to voluntarily give up the property and avoid paying repossession fees.
Your property can only be repossessed by an authorised agent. A creditor can’t just do it themselves if they’re not properly authorised, and they can’t just get a member of the public to do it.
Repossession must be done in a reasonable way – between 6am and 9pm, Monday to Saturday.
If someone is home when the repossession agent calls, the agent must provide them the following documentation:
- A copy of the repossession warning letter
- A copy of the loan contract or hire purchase agreement
- Evidence that they have been authorised to repossess the property by the creditor
- Proof they are a licenced repossession agent
- A statement that your house has been entered with the date
- A list of property to be repossessed
- A statement of your rights after repossession, and your right to complain
If no one is home when the agent calls, they can enter your property in a reasonable way and take the goods, but must leave all the documentation listed above. They also have to make sure your home is not left obviously unsecured.
After repossession, the creditor must send you a post-repossession notice within 14 days. This notice gives you 15 days to either reinstate the contract by paying the amount you are behind by, settle the contract by paying off the entire remainder of what you owe – both of which will get your goods back – or find a buyer who will pay the “estimated value” of the goods, listed in the post-repossession notice.
You can reinstate or settle the contract any time up until the creditor sells, or agrees to sell.
If the creditor doesn’t send you a post-repossession notice, they can’t sell the property and they can’t claim any repossession costs from you.
15 days after sending the post-repossession notice, the creditor must offer the goods for sale. It has to be at a reasonable price and they need to give you reasonable notice before the sale – if the property is up for auction you are entitled to bid on it.
Within 7 days of the sale, the creditor must send you a statement of account. This sets out:
- How much the goods sold for
- The cost of selling the goods
- The amount you had to pay at the time of sale
- Whether you still owe money or whether there’s extra money from the sale which has to be returned to you
If you’re at any stage of the repossession process prior to sale, we can help to figure out a way you could keep your property or limit your costs.