Credit (Repossession) Act 1997 | |
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New Zealand Parliament | |
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Royal assent | 14 November 1997 |
Commenced | 1 July 1998 |
Repealed by | |
Credit Contracts and Consumer Finance Amendment Act 2014 | |
Status: Repealed |
The Credit (Repossession) Act 1997 was an act regulates repossessions in New Zealand. This Act replaced the limited repossession sections in the Hire Purchase Act 1971. [1] The Act outlined the rights of the debtor, the steps required for repossession, the creditors right of entry, as well as steps the creditor must take once they have repossessed goods. When the Act was passed, it gave protection to all goods subject to a hire purchase agreement, but it was amended in 1999 [2] to limit its protection to only the purchase of consumer goods. It was repealed by the Credit Contracts and Consumer Finance Amendment Act 2014.
Part 2 of the Act details what steps a creditor must first do before they can lawfully repossess goods, with the main criterion is that the debtor must be in default under the security agreement [3] normally for non payment).
If the debtor is in default, the creditor must then give Notice to the debtor of the default, [4] which is in the form of what is called a Pre Possession Notice. [5]
And finally, the creditor must allow the debtor time to remedy the default, which can not be a period of less than 15 days from the date the Pre Possession Notice was served on the debtor. [6]
If the creditor breaches any of these rules, they risk a fine of up to $3,000. [7]
When a creditor repossesses goods, they must not enter the debtor's residence in an unreasonable manner, [8] nor can they enter residential premises at a prohibited time, [9] which is outside the hours of 6am to 9pm, and at any time on a Sunday or a public holiday.
Also the Act disqualifies certain convicted criminals from acting as repossession agent [10] s, such as anyone convicted of a violent or dishonesty offence in the previous 5 years, anyone released from prison within the previous 12 months, and all people sentences to jail terms of 10 years or more
On the other side of the coin, if someone wilfully and forcibly (i.e. needs to actually use physical force against the repossession agent) obstructs the legal repossession of goods risks a conviction and a fine of up to $10,000. [11]
Once goods have been repossessed, the creditor must issue a Post Possession Notice, [12] in the form prescribed in Schedule 2 of the Act, [13] and must be served on the debtor within 21 days of the repossession. Failure to do so means that the creditor is not allowed to recover the costs of repossession from the debtor. [14]
Once the goods are repossessed, the debtor has 15 days from the date the Post Possession Notice was served to either reinstate the security agreement, [15] settle the security agreement in full, [16] or introduce a buyer for a price no less than the valuation on the Post Possession Notice. [17]
After this period the creditor can sell the goods, unless the goods a perishable where the creditor can sell the goods straight away, otherwise the creditor cannot claim any repossession shortfall from the debtor. [18]
The creditor must use all reasonable efforts to obtain the best price for the sale of the repossessed goods, [19] and if the goods are being sold by either public auction or public tender, the creditor must give the debtor reasonable notice of the time and place of the proposed auction, [20] plus any reserve price that may have been set. [21]
Within 10 days following the sale of the goods, the creditor must give the debtor a statement of account (often referred to as an Account After Sale) to the debtor outlining any shortfall and how it this amount is calculated. [22]
This creditor can not legally recover any more from the debtor than this shortfall amount, [23] which would prevent the creditor from adding other fees such as debt collection fees, legal fees, etc.
Unfortunately the Act does not incorporate all of the repossession law, with the main other law being that a creditor can not repossess goods that have been sold to a third party which were either sold by a Dealer or goods that are worth less than $2,000 when the security agreement was originally entered into.
The Uniform Commercial Code (UCC), first published in 1952, is one of a number of Uniform Acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through UCC adoption by all 50 states, the District of Columbia, and the Territories of the United States.
A lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienee and the person who has the benefit of the lien is referred to as the lienor or lien holder.
Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.
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A hire purchase (HP), also known as an installment plan, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment and repaying the balance of the price of the asset plus interest over a period of time. Other analogous practices are described as closed-end leasing or rent to own.
Hypothec, sometimes tacit hypothec, is a term used in civil law systems or mixed legal systems to refer to a registered non-possessory real security over real estate, but under some jurisdictions it may sometimes also denote security on other collaterals such as securities, intellectual property rights or corporeal movable property, either ships only as opposed to other movables covered by a different type of right (pledge) in the legal systems of some countries, or any movables in legal systems of other countries. The common law has two equivalents to the term, namely mortgage and non-possessory lien.
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