How does repossession work in New Zealand?
When there is a forceful knock at the door and your first reaction is to hide behind the couch – you probably know someone, somewhere wants that money you owe them.
The repo man has some legal rights if people miss payments on that monster-size TV screen but the person watching it also is protected by New Zealand’s repossession rules.
The brave character who arrives on your doorstep planning to take back the couch you are hiding behind must be a licensed repossession agent or employee with a certificate of approval (COA).
Did the credit agreement comply with the Lender Responsibility Principles and Code?
Before we even get to that stage though – there are some fundamental principles of lending or providing finance that every organisation must follow. In New Zealand all organisations that provide credit and loans must follow the Lender Responsibility Principles and Code, which includes all types of lending from home mortgages to hire purchase agreements.
For example, if you used a tempting 12-months interest free offer to buy that lounge suite the retailer needed to:
Make sure you knew and understood all of the details in the contract such as, what happens if you miss a payment, advise that the item can be repossessed, what the interest rate will be after 12 months, how much the couch will cost if you have to pay interest..
Ensure the loan they provided met your needs
Check you could afford the repayments
Treat you fairly, which includes how you are treated if you miss a payment and what penalties are charged.
Please note: With the current financial challenges New Zealanders are experiencing due to the economic impact of Covid-19, there is some flexibility for lenders to make appropriate lending decisions. Much of the flexibility refers to the lenders’ ability to source information about the borrowers’ ability to repay the loan.
Back to New Zealand’s repossession rules
If you think you entered a hire purchase agreement and the retailer did not follow the principles of responsible lending, then you should get independent advice. Debtfix can help you and talk to the lender on your behalf.
Let’s assume the retailer did everything right, checked your ability to pay for the loan, maybe checked your credit score, explained all of the details and treated you fairly, but life happened and for some reason you missed payments.
The lender needs to contact you to let you know you have missed payments. When you receive letters, emails and text messages advising you that you have missed payments on that comfy couch, you really do need to pay attention.
If the credit contract included interest and late payment penalties, you’re heading towards a bigger problem. If you continue to miss payments, you could expect a phone call to find out what is happening and how you plan to meet your contractual requirements.
Don’t ignore these attempts to contact you.
If you are overwhelmed by the situation give the Debtfix Navigators a call and they will work with you to sort out your money matters.
If you do nothing, it is highly likely a repossession agent or employee will contact you and inform you that they are coming around to pick up the couch. The worst thing is, you do not own that couch until it is completely paid off and if you have made 80 per cent of the payments you could still lose a lot of money because 20 per cent of the debt is outstanding.
See more about this in what happens to repossessed goods further in this article.
A repossession agent can also arrange to take back goods if they have reasonable grounds to believe the goods are at risk of being damaged, destroyed or removed.
Too late – the repo man is here
So, the contract is legitimate, the retailer correctly explained all the details to you, they sent you information and tried to contact you about the outstanding payments and the looming repossession.
The lender needs to give you 15 days’ notice, from the date that you receive the notification, before they come to repossess the couch and leave you sitting on the floor.
The agent can only repossess goods from 6am to 9pm Monday to Saturday. Sundays and public holidays are off limits unless you give them permission. If a repossession agent turns up out of these times you can deny them entry and you should call the police if they will not leave.
If they are on your doorstep during the correct times, they need to give you the paperwork, which includes:
the repossession warning notice
the credit contract
their authority to act on the lender’s behalf (if they are a repossession agent)
their repossession agent’s licence or certificate of approval (as an employee)
a statement of their entry, the date, and the list of possessions to be taken
a statement of your rights after repossession, and your right to complain about the conduct of the repossession agent.
You can pay the agent the money you owe, plus the cost of repossession, to stop them taking the couch but make sure you get a receipt for this payment.
What if no-one is home when the repossession agent turns up?
When the repo man arrives at your home and no-one is there, they can enter your house to reclaim the goods – if the credit contract gives them authorisation to do so. Pretending you are not home or going out on purpose when they have arranged to come to your home, are not good options.
The repossession agent can use reasonable force to enter your locked home, but they must do as little damage as possible and ensure the property is as secure as possible when they leave.
They need to leave paperwork for you, so you know why there is a big gap where the couch used to be.
What a repossession agent cannot take
It is OK for a repossession agent to take the couch with outstanding payments, even if you have nothing else to sit on. However, there are some essential items that cannot be repossessed, unless they have a purchase money security interest (PMSI).
Items that cannot be repossessed in New Zealand are:
Beds and bedding
Cooking equipment, including stoves
Medical equipment
Heaters
Washing machines
Fridges
If a shop sold you a bed on credit and registered a PMSI with the Personal Properties Securities Register within 10 days of the bed being in your possession, they could repossess it if you default on payments.
A repossession agent is not allowed to take travel documents, identification documents or your bank cards.
They can only take goods they have a contractual agreement to repossess if you default on repayments and therefore, they could not take a TV because you are behind in your payments on the couch. A repossession agent cannot take things that were not listed on the original contract.
What happens to repossessed goods?
Once your couch is back in the possession of the retailer, they can’t just sell it. They need to give you a post-possession order within 14 days, or 18 days if they send it by mail.
The order should give you 15 days to:
pay the outstanding debt, plus reasonable repossession fees and allow you to continue with your credit contract
settle the complete contract and pay all the money you owe
allow you to sell the items at the value set out in the repossession notice
allow you to get an independent valuation of the goods
find someone else to continue paying the credit contract If you cannot sort out a way to repay the money owed, the lender can sell the items.
If they sell your couch for more than what you owed, they should refund you the extra amount and they can’t recover accrued fees, charges or interest.
They need to attempt to sell the item at a commercially reasonable rate and within seven days of the sale they need to give you a written statement of:
the amount the item was sold for
any costs associated with selling the item
any outstanding money
the balance owing.
They cannot charge more interest, fees or collection costs. If they could not sell the item for the money you owe, you still need to pay the lender the balance of the outstanding amount – and you still do not have a couch.
The moral of the story - if you cannot make payments contact the lender quick
With all money matters it is important to act quickly and deal with debt as soon as you think you have a problem.
If you are nervous about contacting a business you owe money to and don’t know where to start, call a Debtfix Navigator, now.
Our friendly team can give you free advice and find a debt solution that works for everyone.