In exercising a right of repossession as a creditor you must comply with the requirements set out in the CREDIT (REPOSSESSION) ACT 1997. The Act applies to all "credit agreements", which means hire-purchase agreements and other security instruments, such as chattel mortgages (secured loans) and security interests over motor vehicles.
The Act sets out the procedure for repossession and places restrictions on when and how you can repossess, but it does not in itself grant a right to repossess. Whether or not you have that right will be determined by the agreement itself.
Under the Act, you may not repossess unless:
Before you can take steps to repossess, you must first send the debtor a "pre-possession notice". This must be in writing; a standard form is set out in Schedule 1 of the CREDIT (REPOSSESSION) ACT 1997. The notice must:
If you do not follow these requirements:
The notice must also be sent to any guarantors of the debt.
It is not necessary to send a pre-possession notice if you are repossessing because the goods are at risk.
The repossession must be carried out in a reasonable manner, and only between 6 am and 9 pm, Monday to Saturday. The debtor can, however, consent to the goods being repossessed outside those hours, provided the consent is given after the default in payment has occurred and before you or your agent arrive at the debtor's premises to take the goods.
The following documents must be produced when repossession takes place:
If the occupier of the premises isn't home when the entry takes place, you or your agent must leave a notice specifying:
This notice must be accompanied by copies of the documents referred to above.
Certain people are disqualified from carrying out repossessions, whether as agents or as the creditor:
Anyone who repossesses property in contravention of these restrictions commits an offence and is liable to a fine of up to $10,000.
Within 21 days after repossessing, you must send a "post-possession notice" to the debtor and any guarantors. The form for the notice is set out in Schedule 2 of the CREDIT (REPOSSESSION) ACT 1997. The notice states that the debtor is entitled to get back the repossessed property if, within 15 days of receiving the notice, the debtor either:
The notice must contain your estimate of the value of the goods.
If you don't send a post-possession notice, you are not entitled to recover the costs of repossession from the debtor or the guarantor.
If the debtor hasn't reinstated or settled within 15 days of the post-possession notice, you may sell or dispose of the goods. You are under a positive duty to make reasonable efforts to obtain the best price.
Within 10 days after selling the goods, you must send the debtor a third notice (a "statement of account"), showing:
If there is money left over from the sale, the debtor has six months to begin court proceedings to recover the money from you.
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