Repossession and what you can do about
If you default or fall behind on your loan repayments, your
goods may be repossessed by your credit provider to sell and get
their money back.
Here we explain your rights and the actions you should take if
your goods are being repossessed.
When can my goods be
If you fall behind on your repayments and your loan is secured against an asset, such as a car
or boat, your credit provider may repossess the asset and sell it
to get their money back.
If you receive a default notice, do not ignore it. Talk to your
credit provider or seek legal advice immediately.
Your credit provider can start the repossession process if:
- You are behind on your repayments; and
- They have provided you (and your guarantor, if you have one)
with a default notice, giving you 30 days to pay the overdue
- You have not paid the overdue amount, negotiated a resolution,
or lodged a request to postpone repossession within the 30-day
See problems paying your
mortgage for information about the steps a credit provider must
take before repossessing your home.
Restrictions on repossession
Generally, if you owe less than $10,000 or less than 25% of your
loan (whichever is less), your credit provider cannot repossess
your goods without a court order.
No one can enter your property to repossess the goods
- A court order; or
- Written consent from you, after they have given you written
notice that they cannot enter your residential premises without
your consent or a court order
If your car is parked on the street, your credit provider can
legally tow it away without your consent. To avoid this, make sure
it is parked on your property (for example, in the garage or in
Can I avoid repossession?
You can avoid repossession by paying the overdue amount or
paying out the credit contract. Otherwise, you can contact your
credit provider to seek a hardship variation, or request a
postponement of the enforcement action.
What happens after the goods are
Act quickly to get the repossessed goods back
Within 14 days after repossession, your credit provider must
send you a written notice setting out:
- The estimated value of the goods
- The cost of the repossession, plus any ongoing costs
- A statement of your rights and obligations under the National
Consumer Credit Code
If you can, try to make some loan repayments during the
repossession process. This will reduce the amount you will owe
after the goods are sold.
Generally, your credit provider cannot sell the goods within 21
days of this written notice.
If, during this period, you pay the overdue amount (plus any
additional costs incurred by your credit provider when repossessing
the goods) or pay out the credit contract, the credit provider must
return the goods to you.
Alternatively, during these 21 days, you can send your credit
provider the details of someone who is willing to buy the goods for
at least the estimated value. Do this in writing to make sure the
credit provider offers to sell the goods to that person.
If they do not receive payment within this 21-day period, your
credit provider must sell the goods for the best possible
After the sale
After selling the goods, your credit provider will provide you
with a written statement outlining:
- The proceeds of the sale
- Any costs they incurred in the repossession and sale
- The outstanding balance
Case study: Julie's car is repossessed
Julie took out a personal loan to buy
a new car. When she lost her job, Julie fell behind on her
repayments and the bank repossessed the car.
When the bank wrote to Julie to advise
that the estimated value of the car was $15,000, her parents
offered to buy it at that price. Julie then provided the bank with
her parents' details and the bank sold the car to them. However,
because Julie's outstanding balance on the loan was $18,000, she
had to pay $3,000 to end her credit contract.
Where can I get help?
Get help from an Ombudsman
If you cannot reach an agreement with your credit provider, you
can lodge a complaint with an External Dispute Resolution Scheme.
Contact the Australian
Financial Complaints Authority on 1800 931 678.
Get free legal advice
You can contact a community legal centre or Legal Aid agency for
advice. They can help you understand your rights and explain
what you can do if your credit provider is threatening to repossess
Contact a financial counsellor
A financial counsellor may be able
to help you negotiate with your credit provider.
If you fall behind in your loan repayments, it
is important to act immediately to avoid having your goods
Last updated: 21 May 2019