What can be repossessed?
If you have a secured consumer credit contract, it will list the specific items of your property that the lender can take from you if you do not repay the loan. For consumer credit contracts signed on or after 6 June 2015, lenders must describe security items fully (e.g. they can’t just list “microwave” .
A lender is not allowed to claim all of your property that you own, or will own, as security. If you entered into your consumer credit contract on or after 6 June 2015, the lender is restricted on what kinds of goods they can take as security. More about this is on our consumer Credit contracts – general information page
If you are entering into a loan with a security agreement, you should be clear about which items the lender can take so you don't wind up losing items that are worth more than you owe, for example it may be unwise to list your home as security for a car loan.
All of this is also true if you agree to be a guarantor for someone else's loan.
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What happens when a credit provider or debt collector wants to repossess something of mine?
In order for goods to be repossessed the creditors and repossession agents need to follow the correct process.
Where the consumer credit contract was entered into on or after 6 June 2015 there are also rules about who can take repossession action and what can be taken:
- If you have made a hardship application, repossession action can’t begin while the lender is still considering your hardship application.
- A lender may only authorise repossession action if they are registered on the Financial Services Providers Register
- Only someone who is licenced or certified to repossess is allowed to repossess the goods.
- The lender can authorise someone else to repossess the goods but that person must be licensed or certified and they can only repossess if they have the lender’s authority.
- There are restrictions on what can be taken as security interest
The repossession process is explained below.
When a creditor intends to repossess your property, they will send you a pre-possession notice. This will say how much you owe them, and warn that if you don't pay within 15 days, they will be allowed to enter your property and repossess any goods that are listed as security on the credit contract. If they believe you were going to sell or damage the property they were going to take, they do not have to give you any notice.
Repossession agents arrive
If you don't pay within the 15 day period stated in the pre-possession notice, they can send repossession agents to take your property. They can only take items listed on the credit contract.
The repossession agents can enter the premises any time between 6am and 9pm, Monday to Saturday (excluding public holidays unless you consent in writing), and - depending on the contract - they may be allowed to break into your house if you're not there (although they must not damage your house or leave it obviously open).
If you aren’t present at the time, they must leave a copy of the pre-possession notice as well as:
- a notice to say they've entered the house
- a list of the goods they've taken
- written proof that they're working for the creditor
You’ll normally have to pay the repossession agent’s fee, however if the creditor doesn't leave a pre-possession notice, or leaves any of these things out of it, you might not have to pay it.
No more than 21 days after the goods have been repossessed, the creditor must send a post-possession notice that includes:
- the date they took the goods
- the creditor's repossession costs
- that you have 15 days to 'reinstate' or settle the agreement (e.g. pay what you owe and get your property back)
- the creditor's estimate of the current value of the goods - usually this is not the same as what you originally paid for them
- what will happen if you don't pay
You have 15 days from the date the post-possession notice was sent, to pay the debt and reclaim your property. Your options are to:
- pay the default amount and repossession costs, bringing back the original agreement
- pay the total amount owing
- find someone who'll buy the goods for the current value
- find someone to take over your credit contract
- do nothing
Selling off repossessed property
If you opt to do nothing, the creditor can sell your property, and will usually do so at an auction. They must make a reasonable effort to get a good price for the goods, and they must tell you where and when the goods are being sold. You have a right to bid to buy your goods back, and so does the creditor. If the goods aren't sold within three months, you can write to the creditor requiring them to sell by public auction, or get a Court order directing them to sell.
After the repossessed goods are sold
After the property is sold, the creditor must send you a statement of account within 10 days showing
- how much the goods sold for and the cost of the sale - e.g. advertising, auctioneer's fees
- how much you owed before the goods were sold (the amount required to settle the agreement)
- how much you still owe, or, if the goods were sold for more than you owe, how much you'll get back (it's likely you'll still owe money to the creditor)
For more information, see the Consumer Protection information on repossession.
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Is there anything I can do to prevent a creditor from repossessing my belongings?
If you are having trouble making your payments its best to talk to your creditor as soon as possible.
If you are behind on your payments or are discovered trying to dispose of property that is listed as security on the credit agreement, the creditor has the right to repossess the property.
You can either pay the amount in default or try to negotiate a repayment plan with the lender; however lenders are much less likely to want to negotiate if you leave it until things have got to the repossession stage.
You can find information about what to do if you are disputing a debt on our Credit and debt management page.
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The finance company sent repossession agents around but I never received any notices
If the creditor does not follow the correct procedure when dealing with your debt with them, they could be acting illegally. For example:
- they repossess your property without proper reason to do so,
- they did not provide you with the key information before you signed the credit contract
- they don’t follow the required repossession procedure (e.g. repossession notices)
- the terms of the contract are oppressive, or the creditor acted towards you in an oppressive way
If you believe they have not acted appropriately, you can write to the creditor and explain what the problem is and what you would like them to do to remedy it (e.g. cancel the contract, return property they have repossessed).
If they will not comply, you can make a complaint to the appropriate Financial Dispute Resolution Scheme - every financial service provider must belong to one.
Another option is to apply to the Disputes Tribunal or to the District Court (you should get legal advice if you are considering going to Court).
You can also report them to the Commerce Commission, who enforces the Credit Contracts and Consumer Finance Act.
The CAB can help you decide on your options.
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The vehicle finance company repossessed my car and sold it for much less than its value. They say I still owe a large amount. Can they do this?
If a finance company has repossessed your vehicle due to unpaid payments, they have the right to sell the vehicle at auction to recover their costs. The creditors have to make a reasonable effort to get the best possible price for the repossessed vehicle (see What happens when a credit provider or debt collector wants to repossess something of mine?). However, if the sale price does not quite cover your debt amount you will be liable for the balance.
It’s worth remembering that you will be responsible for any default fees or reasonable fees relating to the repossession. They cannot make a profit from repossession, although they can charge you to cover their costs. An example of this is the cost of selling the car, which can range from petrol costs to commission for the person who sold it. If they charge for these expenses, they must provide the receipts.
If your loan contract states that the money from the repossession and sale of the vehicle was not to count as payment, the contract terms may be considered oppressive, and you could make a claim for this in the District Court. If you are successful, the Court may rule that the finance provider has to change the terms of the contract.
The finance company is not allowed to charge you more than the balance of the debt at the time of sale, although interest applies to the loan.
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A repossession agent wants to take back some of my daughter's belongings, but I'm the one who defaulted on my credit payments - not her. Can they do this?
They can’t take any goods that aren’t specifically listed on the credit contract as security, and only goods owned by you can be listed on your contract.
The first thing to do is to re-read your copy of the credit contract and check what is listed there as security. If your credit contract has a clause which claims all of the property within your house or an 'All Present and After Acquired Property' clause (i.e. everything in the house now and anything you acquire in the future), it is in breach of the law.
In specific circumstances a creditor can repossess goods which you bought after you signed the credit contract:
- you specifically agreed to adding those as security after you bought them, or
- if you entered the credit contract before 6 June 2015:
- you sold the items originally listed as security and bought the other goods with the money
- you bought the goods with money you borrowed from the same creditor (it says such goods can be claimed as security in your credit contract)
If repossession agents take anything else, they are breaking the law. Contact the creditor and ask for those items to be returned – if they refuse to, you can make a claim at the Disputes Tribunal. The CAB or a Community Law Centre can help you with this.
If a repossession agent knowingly claims someone's property that they have no right to take, you can go to the Police and have them charged with theft. If you are worried that a repossession agent will take property they are not entitled to under your security agreement, you can seek advice at the CAB, your Community Law Centre, your lawyer or by complaining to the Commerce Commission.
Following repossession, a post-possession notice must be sent describing how you can reclaim the property that has been taken. Read our outline of the repossession process.
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My car's been repossessed because the previous owner had used it as security for a loan. What can I do?
If you have bought a vehicle privately, and it has been used as security for a loan or purchased using finance that has not been repaid, then the lending company has the right to claim ownership and repossess the vehicle. If this has happened to you, you can take the previous owner to the Disputes Tribunal under the Sale of Goods Act to try to get a refund. However if the previous owner wasn’t able to make the payments on the car in the first place, they may not be able to repay you either.
If you bought the car from a registered dealer and it said on your Consumer Information Notice that “there is a security interest registered over this motor vehicle”, then it can be taken from you. It is the dealer’s responsibility to ensure the information on the notice is correct. If the CIN did not have this statement on it, the car cannot be repossessed from you and the finance company would have to recover their money from the dealer.
Before you buy a vehicle privately, it’s important to check whether it has any security interest on it. You can do this by checking the Personal Property Securities Register (PPSR).