Repossessed goods

Repossession and what you can do about it

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 repossessed?

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.

Smart tip

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 amount; and
  • You have not paid the overdue amount, negotiated a resolution, or lodged a request to postpone repossession within the 30-day notice period.

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 without:

  • 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 repossessed?

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

Smart tip

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 price.

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 process
  • The outstanding balance

Case study: Julie's car is repossessed

frustrated ladyJulie 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 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 repossessed.

Related links

Last updated: 21 May 2019