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Reposession

Repossession – Car and Goods

Repossession

What is Reposession?

When you buy goods on credit, (for example a car) often the cash loaned to you is secured by a mortgage over the products . The lender takes the products as security therefore the lender can take them from you and sell them if you default in paying the loan.

When can the lender repossess the goods?

Goods bought on credit can only be repossessed if:

  1. there is a mortgage or a lease; AND
  2. you have “defaulted” on the loan agreement (for example, did not make repayments, did not keep the products insured etc.); AND
  3. you have been given a notice by the lender (required in most cases) that you simply are in default of the loan, have 30 days to repair the matter and you probably did not fix the matter within that point

A writ to repossess the items is required if:

  1. The mortgaged goods are on personal property and you've got not agreed in writing to the lender entering that property to require the goods; and/or
  2. Where an outsized a part of the loan (75% or more) has been repaid and therefore the amount now owing is a smaller amount than $10,000.

Can the lender take out a mortgage on my primary residence?

For loans granted after 1 July 2010, credit providers cannot take a mortgage over your essential household goods to secure the loan. Essential household goods include kitchen equipment, fridge, freezer, beds, tv, stereo, washer , dryer, educational equipment for youngsters (e.g. a computer), baby equipment, and video recorder.

Property employed by the mortgagor in earning income by personal exertion (tools of trade) also are unable to be used as security if they're valued below the limit within the bankruptcy regulations ($3,750 as at January 2017 – for the newest amount attend the Australian Financial Security Authority (AFSA) website and choose current amounts from the bankruptcy menu).

If the loan is employed to get a specific item, for instance a computer, then the lender can take a mortgage over the item being purchased only.

I have received a default notice - what do i do?

You need to require action as soon as you receive a default notice from the lender. The default notice will offer you a minimum of 30 days from the date of the notice to pay any arrears owing (the amount you're behind on repayments).

If you fail to pay the arrears within the default notice then the lender can:

  1. accelerate the debt, which suggests the entire debt is owing not just the arrears; and/or
  2. repossess the products you mortgaged; and/or
  3. commence court proceedings; and/or
  4. list a default your credit report 60 days from the date of the default (the lender usually uses the default notice to notify you that they'll list a default your credit report).

If you can't pay the entire amount claimed within the default notice you need to:

  1. contact the lender immediately to barter a repayment arrangement and explain that you simply are in financial hardship. See our Financial hardship fact sheet.
  2. Try to get a repayment arrangement agreed before the default notice expires.
  3. Keep paying what you'll afford to pay.
  4. Make a meeting with a free financial counsellor.

IMPORTANT: If the lender agrees to a repayment arrangement then this could stop any longer action. If you think you've got an agreement and therefore the lender is threatening to repossess your goods anyway see below.

If the lender won't comply with a repayment arrangement you ought to then lodge a dispute in writing in an External Dispute Resolution Scheme (EDR), the Australian Financial Complaints Authority (AFCA). The lender must be a member of the AFCA scheme, which is free and can stop all action , which suggests that the lender cannot repossess your goods until your dispute has been considered. See our Dispute resolution fact sheet.

You should also get legal advice to debate your matter and to urge guidance on the way to run your dispute in AFCA.

REMEMBER: Lodging in AFCA should be wont to negotiate a repayment arrangement with the lender where you'll put the loan back so as . If you think that you'll not be ready to catch up you would like to urge legal advice.

They are threatening to repossess my car

You should follow an equivalent steps as above but if the lender is threatening to repossess immediately (or a repo agent is trying to find you) you ought to lodge a dispute with AFCA immediately, and park the car on personal property during a garage until you've got lodged with AFCA. you ought to still contact the lender to undertake and negotiate a repayment arrangement. Let the lender know you've got lodged with AFCA.

The repo man has paid me a visit

The lender doesn't have the proper to enter on personal property to repossess the car/goods without your written consent or a writ . If they struggle to repossess explain that they can't repossess without a writ . Show them this fact sheet.

If you've got agreed to the repossession you ought to also:

  1. take an image of the car/goods before it's repossessed as proof of the condition of the car; and
  2. get your personal possessions out of the car.

What am i able to do once my car/items are repossessed?

The lender must serve you a written notice within 14 days of the repossession of the car/goods stating:

  1. the date the products were taken;
  2. the estimated value of the goods;
  3. the enforcement expenses incurred so far and the other enforcement expenses accruing (such because the daily storage rate for the car);
  4. your rights; and
  5. that the lender cannot sell the products until 21 days after the date of the notice.

If you pay the quantity of the arrears, the enforcement expenses and your normal repayment (if it's due during the notice period) the lender must return the products to you. If the enforcement expenses claimed seem too high, check your contract and obtain legal advice. If you'll revisit on target , but cannot pay the amounts required within the 21 days, you'll apply for a hardship variation. See our Financial hardship fact sheet. If this is often the case you would like to lodge a dispute with AFCA urgently. If you lodge a dispute with AFCA after the car has been repossessed but before it's been sold, the lender cannot sell the car until AFCA has considered your dispute.

Sale of products

If full payment isn't made within 21 days, the lender must sell the products as soon as possible for the simplest price reasonably obtainable.

Once the products are sold, the lender must send you a notice stating:

  1. The amount the products sold for;
  2. The net proceeds of the sale (being the quantity the products sold for fewer the lender’s expenses for arranging the sale);
  3. The amount required to disburse the loan;
  4. Any further recovery action to be taken by the lender against you.

WARNING: Once the products are sold all of the rest of the loan that's owed becomes thanks to be paid immediately. The lender doesn't need to comply with any repayment arrangement.

You can also complain to AFCA if the lender has not sold the products for the simplest price reasonably obtainable, otherwise you believe the enforcement expenses added to the loan haven't been reasonably incurred. you'll need evidence to support your complaint. you'll not get the products back!

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Aoife O'Donohoe

Aoife O'Donohoe

Solicitor | Sydney