Anyloan Australia :: Articles

Default and Reposession

Default and Reposession

Default and Reposession
Most people would assume that a default under a loan contract means that payments haven't been made but, as you are about to learn, there are other reasons why a lender may have the right to repossession.

Default

The most likely reason that there has been a default under the contract is because a payment has not been made. Where a mortgage is held over goods (usually a car), other reasons may include:
  • the borrower fails to maintain insurance;
  • the borrower sells the goods;
  • the borrower otherwise disposes of the goods;
  • the borrower transfers the ownership to another person.

Legal proceedings

This term generally means an action that is initiated in court.

Debt Stressed?
Image for Debt Stressed?If you're struggling to pay your debts and covering living expenses, we're here to help. Through our national panel of Debt Management specialists, we can help customers with $10k or more in debt by consolidating your existing loans, stopping Debt collectors from contacting you and re-negotiating repayments on your terms!
Although the credit provider has wide powers to begin legal action to recover a debt, in regulated contracts certain conditions must be first be satisfied:
  • the debtor (the person who owes the money under the contract) is in arrears of their payments;
  • an appropriate notice has been posted to the last known address of the debtor (or any guarantor);
  • the debtor has been given the appropriate period to pay the debt.

There are exceptions to these rules.

For instance, where the credit provider has made reasonable efforts to contact the debtor and has been unable to do so.
Remember, if this is a second or later default, the credit provider may have previously informed you that no further notice will be given.
Get legal advice if proceedings have been instituted.

Extensions

It is possible to seek an extension on the loan repayments if you are in default, but it is best to have a reasonable excuse.

Negotiation is often a good starting point.
For instance, if you were unemployed for a period of time but are now in a position to make the repayments, this might allow an extension to be provided.
Where larger sums are involved, it is important to get legal advice.

Refinancing

Do not agree to a proposal to refinance without getting professional advice from an accountant, lawyer or specialist legal centre/financial adviser.

Repossession

Repossession can take place under the Consumer Credit Code following the expiry of the appropriate notice period (or following an exception to these rules as above) where the credit provider has a mortgage under the contract (usually a car).

However, repossession cannot place if:
  • the amount still to be paid is less than 25% of the amount financed;
  • the goods are stored on private property, unless a court or tribunal has made an appropriate order or with the borrower's (or occupier of the premises) consent. Following repossession under contracts regulated by the Consumer Credit Code, the borrower must be given notice of:
  • the value of the goods;
  • the repossession expenses; and
  • the right to recover the goods by paying the debt or remedying the default.

It is still possible to negotiate a deferral of this procedure e.g. if the borrower can prove they are about to receive monies owed to them that will cover the costs.

Sale. The credit provider must get the best price possible for the goods.
On the other hand, it is possible for the original borrower to introduce a buyer to the credit provider.
If the best possible price has not been obtained (this may be difficult to prove if you did not have the goods valued prior to repossession), or the provider unreasonably refuses the person you introduced, you should seek professional advice.

Money owed after sale

If the amount obtained on the sale does not equal the amount owed under the contract, the credit provider may begin legal proceedings in a local or magistrates court to recover the balance.

Guarantors

If you are the guarantor under a contract you may be liable for the amounts owed. However, this is restricted to situations where:

  • a judgement debt has been made against the borrower i.e. a borrower who has a court judgement against them that orders them to pay a sum of money to the credit provider; or
  • the court has allowed the credit provider not to obtain a judgement against the borrower; or
  • the borrower is insolvent or cannot be found. Get legal advice if you are the guarantor in this situation.

Unjust contracts

Under the Consumer Credit Code, any of the parties to the regulated credit contract can ask to get out of a contract if it was unjust or harsh at the time it was entered into. Whether the contract was unjust will depend on the circumstances. It may be because of:

  • harsh terms in the contract;
  • the way the negotiations were conducted to induce the borrower to enter into the contract;
  • a rate of interest that is excessive in the situation. It is important to get legal advice of you believe the contract is unjust because the issue must be adjudicated by a court or tribunal. Under the Consumer Credit Code the court may look into (amongst other things):
  • the inequality of the bargaining situation;
  • public interest;
  • whether independent professional advice was obtained prior to signing;
  • whether the borrower understood the terms of the contract;
  • whether there were unfair tactics or unfair pressure applied to the borrower.

Published: Sunday, 1st Aug 2021
Author: Paige Estritori


Finance Articles

Do You Qualify? Crucial Factors That Affect Your Loan Approval Odds Do You Qualify? Crucial Factors That Affect Your Loan Approval Odds
For Australians, the quest to secure a loan can be as nerve-wracking as it is pivotal. Whether it's to finance a home, car, or even to consolidate debts, the outcome can profoundly impact your financial trajectory. Acquiring loan approval is not merely about ticking boxes; it's about presenting a financial profile that reassures lenders of your capacity and commitment to repay. - read more
Understanding the Power of Pre-Approval in Your Financial Journey Understanding the Power of Pre-Approval in Your Financial Journey
Pre-approval in the financial world refers to a preliminary evaluation by a lender to determine how much credit or loan they may be willing to extend to an applicant. It's a vital step for any Australian looking to finance a significant purchase such as a home or a car. Essentially, pre-approval provides potential borrowers with an indication of their borrowing capacity, subject to final verification and approval. - read more
How to Boost Your Chances of Loan Approval How to Boost Your Chances of Loan Approval
The loan approval process can often seem complex and daunting, but understanding what it entails is the first step toward boosting your chances. In essence, loan approval is the lender's process of assessing whether you are a viable candidate for the loan you have applied for. This involves evaluating your financial history, current financial status, and the potential risks involved in lending to you. - read more
Mastering Money: Strategies to Boost Your Financial Health Mastering Money: Strategies to Boost Your Financial Health
Financial health is a crucial aspect of overall well-being, particularly in the ever-evolving economic landscape of Australia. The capacity to manage personal finances effectively not only provides a sense of security but also opens doors to opportunities that might otherwise be out of reach. As such, mastering the art of money management is an indispensable skill for Australians from all walks of life. - read more
Top 10 Smart Borrowing Strategies for Australians: A Comprehensive Guide Top 10 Smart Borrowing Strategies for Australians: A Comprehensive Guide
Smart borrowing is crucial for individuals and businesses in Australia to manage their financial goals effectively. With a well thought-out borrowing strategy, you can optimize your finances, minimize costs, and achieve your financial objectives. - read more
The Power of a Good Credit Score: Tips to Maintain and Protect Yours The Power of a Good Credit Score: Tips to Maintain and Protect Yours
Credit scores play a crucial role in the financial journey of any individual, especially in Australia where they serve as a snapshot of your financial reliability. This numerical expression based on a level analysis of a person's credit files has a far-reaching impact on various aspects of financial borrowings. - read more
Comparing Loan Options in Australia: The Role of Loan Calculators Comparing Loan Options in Australia: The Role of Loan Calculators
Loan calculators are powerful tools that assist borrowers in estimating their potential loan payments. By inputting variables such as loan amount, interest rate, and loan term, these calculators provide insight into what one's monthly repayments might look like. This can be invaluable for budgeting and financial planning purposes. - read more
The Impact of Credit Scores on Loan Applications: How to Borrow Smartly The Impact of Credit Scores on Loan Applications: How to Borrow Smartly
Credit scores play a crucial role in loan applications, determining eligibility and interest rates for borrowers. Understanding how credit scores are calculated and the impact they have on loan applications is essential for anyone who wants to borrow smartly. - read more
Top Mistakes to Avoid After Getting Your Loan Approved Top Mistakes to Avoid After Getting Your Loan Approved
Getting your loan approved is a significant milestone, but it also opens the door to many new responsibilities. Proper management of your finances after loan approval is crucial to avoid common pitfalls that could derail your financial stability. - read more
How to Improve Your Credit Score in 30 Days How to Improve Your Credit Score in 30 Days
Understanding your credit score is crucial, especially when you're looking to secure a loan. Whether it's for a home, a car, or personal use, a good credit score can make a significant difference in the type of loan you qualify for and the interest rates you'll be offered. - read more

Finance News

Improving EOFY Planning: The Call for ATO Portal Access for Advisers Improving EOFY Planning: The Call for ATO Portal Access for Advisers
09 Jul 2025: Paige Estritori

In a recent discussion, James O'Reilly, Director and Financial Planner at Northeast Wealth, underscored the benefits that could come from granting financial advisers access to the Australian Taxation Office (ATO) portal. Speaking on The ifa Show, O'Reilly proposed that this access would significantly simplify the services financial advisers provide to clients, particularly at tax time and the end of the financial year (EOFY). - read more
RBA Holds Rates Steady, Shocking Markets and Shifting Economic Expectations RBA Holds Rates Steady, Shocking Markets and Shifting Economic Expectations
09 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) has decided to keep the official cash rate steady at 3.85%, taking many by surprise after expectations of a 25-basis-point cut had built up in financial circles. This unexpected move comes amid recent data indicating easing inflation and weaker than anticipated economic growth, conflicting with prior predictions of a cut. - read more
RBA to Continue Interest Rate Cuts Amid High Unemployment RBA to Continue Interest Rate Cuts Amid High Unemployment
08 Jul 2025: Paige Estritori

The Reserve Bank of Australia (RBA) is anticipated to maintain its trajectory of incremental interest rate reductions, according to insights from leading financial analysts at ANZ. Recent data from the ANZ-Indeed Australian Job Ads series revealed a rise from 114.8 in May to 116.9 in June, suggesting a potential rebound in job advertisements after previous declines. Despite a stable unemployment rate and hours-based underutilisation rate since mid-2024, the Australian labour market remains strained. - read more
RBA Poised for Cash Rate Cut Amid Inflationary Trends RBA Poised for Cash Rate Cut Amid Inflationary Trends
07 Jul 2025: Paige Estritori

As the Reserve Bank of Australia (RBA) prepares for its forthcoming monetary policy announcement, economic analysts anticipate a further reduction in the official cash rate by 25 basis points. This prediction, supported by Finder’s RBA Cash Rate Survey, reveals that 88% of participating experts foresee a cut that would lower the interest rate to 3.6%, aligning the decision with the recent decline in both headline and core inflation to the central bank's target range of two to three percent. - read more
Uncovering the Impact of Unsolicited Solar Sales on Consumers Uncovering the Impact of Unsolicited Solar Sales on Consumers
04 Jul 2025: Paige Estritori

In a concerning revelation, Australian retiree Christine Hirchfield shares her ordeal with an unsolicited solar installation that turned into a financial nightmare. Despite her initial enthusiasm for cheaper energy bills and a greener home, the project remains incomplete more than a year later. Consumer groups are now advocating for a nationwide prohibition on deceptive sales practices that target vulnerable consumers like Ms Hirchfield. - read more

Need Help Finding a Loan?
Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!
Loan Amount:
Postcode:
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Capital Gain:
The profit realized from the sale of a capital asset, such as stock or real estate, where the sale price exceeds the purchase price.


Quick Links: | Compare Loans | Bad Credit Loans | Finance For Self-employed | Low Rates | Free Loan Assessment