NEW BOOKLET EXPLAINS CHANGES TO CREDIT (REPOSSESSION) ACTConsumer Affairs
Consumers will have greater protection from "cowboy" repossession agents thanks to the new Credit (Repossession) Act that comes into force tomorrow, Minister of Consumer Affairs, Hon Robyn McDonald said today.
"The new act will provide consumers with a much greater level of protection and security when dealing with repossession agents and their finance companies.
To ensure retailers and consumers clearly understand the new Act, the Ministry of Consumer Affairs has produced a new booklet called Hire Purchase - A Guide for Retailers.
This booklet, funded by DTR, the Auckland-based national hire purchase and rental company, has been sent to retailers to provides them with information on hire purchase laws, the new Act and answers to common consumer questions.
"It is important retailers and consumers clearly understand their roles and responsibilities when they enter into any purchase agreement involving ongoing payments," the Minister said.
"I believe the new Act and this booklet will go a long way to ensuring consumers, retailers and credit agents understand their rights and responsibilities and provide greater protection for all parties," the Minister said.
There are a number of changes in the new Act.
"The new Credit (Repossession) Act will provide clear guidelines on the responsibilities of repossession agents and consumers ensuring everybody gets a fairer deal. While many repossession agents act in a professional manner there are some agents who act in a way that impinges on consumers rights and bring their profession into disrepute," she said.
Under the new Act, repossession agents can only enter a property between 6 am and 9 pm, Monday to Saturday. They cannot enter a property outside of these hours or on a public holiday. Repossession agents must not enter a property in an unreasonable manner or leave it in a way that it is obviously open.
If the consumer is not home, the repossession agent must leave an inventory of the goods taken and a notice of the date of entry.
A significant change under the new Act is that repossession agents must also provide the debtor and their guarantor with a notice of pre-possession 15 days before taking possession of any goods. Previously guarantors did not receive any notice of repossession.
"This means guarantors won't be left in the dark as they were previously," the Minister said.
The 15-day notice period is also an extension of five days on the current Hire Purchase Laws.
Another substantial change under the new Act is an increase in coverage for consumers with secured loans. Under previous law these consumers could have had their goods seized without notice if they missed payments on their loans.
"The new Act will require finance companies to apply the same process of repossession to secured loans as apply to hire purchase agreements," the Minister said.
A further change will require creditors to send the debtor and their guarantor a post-possession letter within 21 days of taking any goods. This notifications gives the debtor 15 days to either:
- make arrangements repay the debt and repossession charges;
- find someone else to take over the contract;
- find someone willing to buy the goods for cash; or
- settle the agreement by paying the total amount owing.
If goods end up being sold, the creditor must ensure they are sold in a commercially reasonable way and provide the debtor with a full details of any sale within 10 days of the sale.