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.
Please note, this information does not apply to mortgages and repossession of real property, such as houses. For more information in relation to the repossession of houses, please see our Home Loans page.
How can the credit provider repossess goods?
- You must be in default (have overdue payments)
- The lender must send you a default notice giving you at least 30 days to fix the overdue payment
- 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.
Repossessing the secured goods
A lender or their agent (someone acting on behalf of the lender) must not enter residential property to repossess the goods unless they are authorised:
a) by a court; or
b) in writing, by an occupier of the residential premises.
A lender may request information regarding the location of the goods. You have 7 days to comply with their request. It is a criminal offence to refuse compliance with the lender’s request.
Refusing consent may also increase the costs of recovery as the credit provider will need to pursue a court order to authorise entry. This may be added to the overall expenses for recovering the debt.
What happens after the goods are repossessed?
Within 14 days of repossession the lender must give you a written notice, which must state:
- The estimated value of the goods;
- The costs of recovering the debt that have accrued and are accruing; and
- A statement of your rights and obligations.
The lender is not allowed to sell the goods within 21 days after this written notice is provided to you.
If the debt has not been paid in this period, the lender can either:
- Sell the goods for the “best price reasonably obtainable”; or
- Sell the goods to a person you nominate (who is prepared to buy the goods at the estimated value or greater)
What happens after the goods are sold?
After the goods have been sold, the lender must provide you a written notice of:
- The gross amount realized on the sale;
The net proceeds of the sale;
- The amount still owing on the credit contract or the amount due under the guarantee, if a guarantee exists;
- Any further action to recover the debt proposed to be taken by the credit provider against the debtor; and
- Any other necessary information.
The lender is entitled to deduct repossession and sale costs from the proceeds of the sale.