If you have an overdue debt and fail to make payments on it, your belongings could get repossessed. Find out about the process and what your rights are. If you have a credit contract and your payments are overdue, the lender will take steps to recover their money. They might repossess products you:. If you're struggling to repay a debt, help is at hand. The MoneyTalks helpline is a good place to start. Free confidential advice external link — MoneyTalks. Before you buy products or services on credit or take out a personal loan, find out what will happen if you can't pay.
Unexpected life events such as an accident, illness or losing your job could mean you don't have as much money as you expected. You can compare different companies' debt policies and choose the one that is best for you. Lenders repossess items so they can repay your credit contract by selling the products or property they repossess and using the proceeds to repay your loan.
If you are struggling to meet payments for products you have bought on credit, you have certain rights before the products are repossessed.
You also have rights if you have provided items as security for a loan under a credit contract. They only apply to consumer products bought for personal use.
If a lender doesn't follow the correct procedure for repossession, they could be acting illegally and you can report them to the Commerce Commission. Make a complaint to the Commerce Commission external link — Commerce Commission.
The lender must give you 15 days advance written notice from when you receive it to pay them the money you owe. This notice must include:. The lender may act without issuing a written notice if they believe the items are at risk of being destroyed, damaged or removed.
You can challenge this, eg seek damages or an injunction, if you don't believe they followed the correct repossession procedure or had reasonable grounds to act. This terminates the credit contract, and the post-possession rules then take effect. Only licensed repossession agents can do repossessions, and only between 6am and 9pm Monday to Saturday.
If they arrive outside these times without your consent, you can refuse to let them into your home and ask them to leave. If they refuse to leave, you should call the Police. Make sure you get a receipt if you do this. If no one is home and the credit contract authorises them to enter, they can enter your house and take the items. This article is presented for informational purposes only and is not intended as legal advice.
In the movies, we know the hero of the story is really down on his or her luck when they return home to find a small squadron of overall-wearing men removing expensive possessions from their home. There goes the television. And the couch. And a whole arsenal of other trinkets and treasures the main character could no longer afford. Like practically everything you see in the movies, repossession is a little different in real life.
The item most often associated with repossession is your car. Homes are also subject to repossession, although we usually call that a foreclosure. Essentially, any purchase made with a secured loan is subject to potential repossession if the terms of the loan are not met. A secured loan is any loan where real property is used as collateral, most often houses, cars, motorcycles, boats, etc.
In essence, the lender has purchased the item for you and let you keep it while you pay them back. If you stop paying them back, then the lender will retake possession of the property.
If you purchased furniture or appliances from a rent-to-own store on an installment plan where you are technically renting the item until the moment it is fully paid for , those items would be subject to repossession. Purchases made with a credit card, however, are not secured, and therefore not subject to repossession.
A credit card company could potentially take you to court over an unpaid credit card bill, but they could not repossess the actual items purchased with the card. You will generally have to be severely delinquent before a lender will begin the repossession process.
The lender will most likely notify you about the situation, but the specific mechanics behind that notification will depend on the state where the transaction took place and the terms of your contract. In most cases you will receive written notification informing you that you are in default and providing you with your options. You may have the ability to return the collateral, but the lender is not required to accept the returned item. In particular, if the collateral is now worth significantly less than the debt, they will likely refuse the return.
The lender will then sell the collateral in order to recoup some of the loan. If the collateral is sold for less than the value of the loan, you will be responsible for the difference. Stay in contact with your lender. In general, lenders would prefer to avoid repossession almost as much as you would. Consider the options your lender presents and be willing to negotiate — just make sure you get any agreement down in writing.
One option may be to work with the lender to secure a resale of the property and then acquire a new loan either with the original lender or a new lender to buy out the difference. The agent can, however, ask to come into your home, and can enter if someone else who lives at the house gives him permission to come in. The repossession agent can get a court order allowing him to access your property to repossess the appliances. However, such an order does not authorize him to break in.
Instead, if you don't agree to let him in, he can contact the police and obtain a warrant to enter your property -- by force if necessary. If a repossession agent illegally enters your property, you can sue for damages. These damages might include damage to your property or theft that resulted from the agent leaving your home open. In most cases, you also can recover attorney's fees and court costs. You also may be able to use the illegal entry as a defense against repossession.
Van Thompson is an attorney and writer.
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