All about repossession of assets

Learn how to guard your large purchases against repossession.

Understanding repossession

A huge number of us make various large purchases over the years, such as buying a property, a motor vehicle, or even a boat. The lucky few are able to pay outright for these purchases which means that as soon as the transaction goes through the things that they have purchased – be it a house, boat, car, or anything else – become theirs. However, for the majority, buying something of this magnitude means having to take out finance, which in turn means that until the finance has been paid off in full, the item does not truly belong to you.

Your purchase will finally become yours once you have paid off any finance off in full. However, until then, it is important that you maintain the repayments on your mortgage, car finance, boat finance, or finance you have taken for any other large purchase, as otherwise you could end up losing the asset through repossession. Repossession is something that the credit/finance provider may be entitled to do in the event that you fail to keep up with payments on your finance. If this happens, you could not only end up losing the asset but also any payments that you have made on it so far.

In order to avoid repossession proceedings on any of your assets on which you still have finance to pay, you need to ensure that you keep on top of repayments so that the lender or finance provider has no reason to consider repossessing the asset.

More about repossession of assets

Every year, many people who 'own' assets such as vehicles or property end up having repossession notice served against them. In some cases, the proceedings are halted as a result of action taken by the 'owner' of the assets or through negotiations. On other occasions, the repossession proceedings are seen through to the end and the 'owner' of the asset ends up losing the property, vehicle, etc, because they have failed to keep up with the payments (i.e. have defaulted on repayments). Remember, although many people class themselves as being the 'owner' of a particular asset, such as a vehicle or property, they are not truly the owners until they have paid in full for it, which is why the asset can so easily be repossessed.

When a company is looking to repossess an asset they must usually serve a repossession notice under Consumer Credit Code regulations. The process is also dependent upon how much of the balance is actually outstanding – there is normally a special process in the event that the outstanding balance is less than 25 percent of amount that was financed (or $10,000 depending on which is the lower amount).

Stopping repossession proceedings

In cases where consumers are issued with a repossession notice, it may still be possible to halt the proceedings under certain circumstances. For example, if you can prove to the lender that you are due to receive money that will cover the cost of the outstanding payments, you may be able to negotiate a deferral of the repossession.

Alternatively, you may be able to negotiate with the lender if you are suffering financial hardship on a temporary basis, such as that caused through illness or unemployment. Whilst there are no guarantees with regards to repossession proceedings being halted, most lenders will be sympathetic to genuine cases of hardship and may therefore be willing to negotiate with regards to repayments. In some cases, lenders will be willing to reach an agreement with regards to a revised repayment schedule, which could involve paying lower amounts over a longer period of time.

If you are unable to reach an agreement with the lender with regards to sorting matters out without resorting to repossession, you may find that the next best place to go is Consumer Affairs or the Fair Trading Office, where you may be able to get valuable advice about what you can do to resolve the situation.

Do bear in mind that if you do reach an agreement with regards to your repayments with the lender but you then default on the payments again, you may find that the lender pushes ahead with repossession proceedings without providing you with any further notice.

Sale of the asset

In the event that the asset needs to be sold as part of the repossession proceedings, the company providing the credit will be looking to get the best price possible from the sale. It is also possible for the borrower to provide the details of a buyer to the credit company. The company is not obliged to agree to the buyer that has been introduced, but if you believe that the company has refused on unreasonable grounds, you can seek further advice. You also need to bear in mind that the money raised from selling the asset my not cover the amount that is owed. If this is the case, you may find that the lender starts proceedings to try and recover the difference between what you owe and what the sale of the asset has raised.

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18 Responses

  1. Default Gravatar
    alisonJune 15, 2017

    I have a car that needs to be repossessed by the lender but they are refusing to take it. The debt has been sold from the original car finance to a debt collector. They told me that it is in their best interests to keep the loan and not take the car back because it’s worth more to them as they know the car had been damaged. The loan was originally 42k but is now up to 46k and gaining at 10% per day. I told them I can’t afford to pay and I want them to take the car but they said no. What should I do?

    • Default Gravatar
      markApril 10, 2018

      Debt Sale is a option to all creditors within Australia. Should the new creditor wish not to repossess the secured item? This is their choice.

      As a part of your contract it is a condition that you keep the vehicle registered and insured at all times. If the vehicle is damaged and not repaired I am guessing this was not the case.

      You could choose to surrender the vehicle to the current creditor, but they may refuse to accept. Both either way will not mean your debt will go away.

      Depending on the damage and the amount that the vehicle is sold for, may only repay a few hundred dollars to the account. You will still need to work out an arrangement or payment of the remainder, 40k.

      Also the interest would be 10% p.a not per day. As this is higher than the original lender which is not allowed as a part of the debt sale. On a balance of 40k, your interest would be increasing by 10.95 each day.

      Depending on the reasons for your non-payment, you could apply for hardship with the creditor. This will mean they will asses you for possible arrangement or reduction of interest payments.

      I wish you luck.

    • Default Gravatar
      JonathanJune 15, 2017

      Hi Alison!

      Thanks for the comment.

      Transferring your obligation to a debt collection instead of repossession may be a valid step provided that it is stated on your contract upon purchase. You may want to check your signed agreement, to see if there are any clauses stated pertaining to this especially for damaged cars.

      You can try to dispute this matter with a higher personnel of the lender’s institution. If not, you may want to speak to a lawyer or get assistance from Consumer Credit Australia to determine the fair course of action.

      Hope this helps.

      Cheers,
      Jonathan

  2. Default Gravatar
    ShelbyMarch 11, 2015

    Hi just wondering where my sister stands. She has a car that is registered in her name. Her ex partner bought the car for her approx 2 years ago through his personal loan. he believes he can take the car from her. Legally is he allowed to take the car from her.

    • Default Gravatar
      markApril 10, 2018

      Hi,

      As it is a personal loan neither of you can repo the car, as it is registered in the ex-partner’s name.

      If it was registered in your name you could hire a repo agent and continue but this sometimes can cost over $1000.00 and require you to provide proof of ownership and purchase.

      You could take the person to court and see if you can get an order to collect the vehicle but otherwise not much you can do.

      Sorry for the bad news.

    • Default Gravatar
      john84December 30, 2015

      I am interested to find more information on this also. I bought a new Falcon when I was with my ex, when we split I gave her the car because she needed it and I still pay the personal loan. I was trying to do the right thing and look after her. I think I had to gift it to her so she could rego it in her name. She then emptied my bank accounts and took everything I own. I have had to sell my car and get public transport to work. Is there some way of getting the car back even though it is a personal loan and rego in her name?

    • finder Customer Care
      ElizabethJanuary 4, 2016Staff

      Hi John84,

      Sorry to hear about your situation.

      You’ll need to get in touch with someone who can offer you legal advice. As the car is under her name it might be difficult to get back, but you can contact a free legal service in your state to find out if there are any options available to you.

      Thanks,

      Elizabeth

    • finder Customer Care
      ShirleyMarch 12, 2015Staff

      Hi Shelby,

      Thanks for your question.

      This enquiry is best directed at a solicitor or lawyer. It will depend on any contractual obligations they had prior to the vehicle being purchased, however, if the vehicle is registered under her name it is legally hers and will be difficult to take from her.

      Cheers,
      Shirley

  3. Default Gravatar
    SusannaJanuary 5, 2015

    My ex partner had a boat through finance with our bank and when we separated he took the boat with him, assuring me he would maintain weekly payments- sure enough he hasn’t now a repossession guy came asking to see the boat saying there had been no repayments. I let the ex know and he said he sold it. What can I do? I can not pay what their wanting and the ex refuses to assist.

    • Default Gravatar
      markApril 10, 2018

      The finance obligations lie with who ever took the finance out.
      If it was in your name or you were listed on the account or you were a guarantor then you have issues that you need to deal with.
      If you were none of the above, tell the repo guy where your ex lives and point him in their direction.

    • finder Customer Care
      ElizabethJanuary 6, 2015Staff

      Hi Susanna,

      Thanks for your question.

      You may want to seek legal advice in this matter. But you mentioned that the boat was purchased by your ex-partner, so any financial implications that come from him selling the boat without making the repayments should be his responsibility. As I mentioned, legal advice may be best to seek out. There are free legal aid services in every state.

      I hope this has helped.

      Thanks,

      Elizabeth

  4. Default Gravatar
    CarrieMay 27, 2014

    How do I make sure if I buy my sons repossessed car for the finance company’s estimated value that I don’t get stuck with the outstanding balance.

    My son has now gone bankrupt so the outstanding balance owing on the car will be part of this, I am worried that the finance company will take my money and not remove the PPSR title and take the car again if I don’t pay the whole outstanding debt. What do I need to get from the finance company, the letter acknowledging my offer states they will endeavour to remove the PPSR title they hold over the vehicle. The girl I spoke to kept saying that I am buying it from my son, but it has been repossessed and is sitting in an auction yard? After the treatment when we were trying to keep the car I don’t trust them at all, the word “Endeavour” means they will attempt! they have given me BSB numbers to pay into!! What should I do?

    • finder Customer Care
      ShirleyMay 28, 2014Staff

      Hi Carrie,

      Thanks for your question.

      It’s probably best to contact the PPSR National Service Centre for advice about your situation asap, as there could be some legal forms involved. I’ve emailed you their contact details.

      Cheers,
      Shirley

  5. Default Gravatar
    MichaelNovember 28, 2013

    I bought a car from an honest-looking man and have found out there is an encumbrance on it. Talking to the finance company has not yielded details of loan outstanding. The honest man has disappeared – overseas? How do I proceed to negotiate settlement with finance company to avoid repossession? Should I simply keep the car locked away off-road until encumbrance expires?

    • finder Customer Care
      MarcNovember 28, 2013Staff

      Hello Michael,
      thanks for the question.

      It may be a good idea to seek legal aid to find out where you stand. I’ve emailed you more information regarding this.

      Cheers,
      Marc.

    • Default Gravatar
      MichaelNovember 28, 2013

      Thanks for your help, Marc

  6. Default Gravatar
    JoanneJune 14, 2013

    Can a finance company repossess a car while it is in a workshop and will the repairer be liable?

    • finder Customer Care
      JacobJune 14, 2013Staff

      Thanks for your question Joanne. If you have been issued with a default notice and you have failed to rectify the situation, a finance provider can reposes the mortgaged items without the consent of borrower if the asset is on public property. Please speak to the lender directly or to a financial advisor for information about the rights and responsibilities of a party looking to repossess a secured asset. The repairer will not be liable if a car is repossessed in their workshop. liability rests with the person who has taken on the debt to finance the purchase of an asset. Hope this helps. Jacob.

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