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 receive a default notice, do not ignore it. Talk to your
credit provider or seek legal advice immediately.
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.
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 behind on 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 your yard).
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
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.
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
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
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 Financial Ombudsman Service
on 1800 367 287 or the Credit and Investments
Ombudsman on 1800 138 422.
Get free legal advice
You can contact a community legal centre or Legal Aid agency for
free legal advice. They can
help you understand your rights and explain what you can do if your
credit provider is threatening to repossess your assets.
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: 06 Jan 2016