Our guide to your rights around repossession.
Sometimes when you borrow money, the lender requires the loan be "secured". This means if you default on the loan, the lender can repossess and sell a specified item of yours to recover the debt. Secured loans include hire purchase deals (the security is the item you bought on HP) or personal loans secured by one of your possessions.
Certain goods cannot be used for security. This includes beds and bedding, cooking equipment, medical equipment, portable heaters, washing machines, refrigerators, travel and identification documents, and bank cards.
The lender can insist you have a "guarantor". This is someone who agrees to repay the loan if you cannot.
If you stop repaying a loan and the guarantor does not take over the repayments, the lender can repossess the security and sell it to recover the debt. The repossession process is covered by the Credit Contracts and Consumer Finance Act 2003. Repossession agents must be licensed under the Private Security Personnel and Private Investigators Act 2010.
Before repossession the following rules apply:
- A lender cannot take possession of the goods unless the borrower is in default or the lender has reasonable grounds to believe the goods are at risk.
- The lender must serve a repossession warning notice on the borrower and every guarantor, unless they have reasonable grounds to think the goods have been, or will be, damaged or removed.
- Every repossession warning notice must give the nature of the default and give the defaulter at least 15 days to remedy the problem.
Rights of entry
The following apply when goods are being repossessed:
- The lender must comply with the Act’s lender responsibility principles when exercising the right to enter premises.
- The lender cannot enter property outside the hours of 6am to 9pm Monday to Saturday, nor can they enter on Sundays or on a public holiday, unless the borrower consents to this in writing.
- The lender must give the defaulter a copy of the repossession warning notice.
- If agents are repossessing on behalf of the lender, the agents must give the defaulter a copy of their authority to act on the lender's behalf.
- If the occupier of the premises is not present during the repossession, the lender must leave a notice in a prominent place stating the premises have been entered and listing what goods have been repossessed.
- The lender cannot repossess goods or enter premises if the debtor has made a written complaint in relation to any enforcement action and the complaint has not been resolved, or has made a hardship application and the application has not been decided.
- The lender must serve a post-possession order on the borrower and any guarantors within 14 days of repossession.
- The notice must state that, to get the goods back, the borrower must within 15 days reinstate the credit agreement (for example, by paying any outstanding money due), or settle the agreement by paying off the outstanding balance.
- The lender cannot sell the goods until the post-possession notice has expired.
- Borrowers can obtain an independent valuation of repossessed goods.
Selling the goods
When selling the goods, the lender:
- Must ensure the sale is commercially reasonable and take reasonable care to ensure the best price is obtained for the goods.
- Must give the borrower reasonable notice of the proposed sale.
- Where goods are sold, must give the borrower a statement of account within 7 days after the sale showing the gross sale proceeds, the costs of the sale, and the balance owing to or from the borrower.