When you borrow money to buy goods, the lender will often take out a ‘security’ over those goods. This gives the lender a right to repossess and sell the goods in certain situations.
All lenders must comply with the requirements of the National Credit Code, which sets out the pre-conditions before a lender may repossess secured goods. These include:
- The debtor must be in default (usually, a failure to make a repayment).
- The lender must send the debtor a default notice giving 30 days to fix the default.
- If the default is fixed within this 30-day period, the lender must not repossess the goods.
- If the default is not fixed within this 30-day period, the lender may take steps to repossess the goods.
- If the amount owing is less than 25% of the original amount borrowed or $10,000, whichever is the lesser, the lender must obtain a court order to repossess the goods.
For more information, including the steps a lender must take to repossess goods, see our Repossession of goods other than real property fact sheet, or contact our advice line on (08) 9221 7066.