Business Loans 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


Business Loans Articles

A Growth Blueprint: Crafting a Financial Plan for Expanding Enterprises A Growth Blueprint: Crafting a Financial Plan for Expanding Enterprises
Financial planning plays a crucial role when businesses are poised for growth. As enterprises expand, a well-crafted financial plan acts as a guiding framework to navigate the complexities that come with scaling operations. This plan helps in ensuring that resources are meticulously allocated and potential financial hurdles are effectively managed. - read more
Maximizing Your Chances of Approval for a Startup Loan in Australia Maximizing Your Chances of Approval for a Startup Loan in Australia
Securing financing is a pivotal step for any startup looking to establish itself and grow. In Australia, the startup lending landscape is buoyant, offering a mix of traditional and innovative financing options. The financial ecosystem is robust yet competitive, and understanding how to navigate it is crucial for new business owners. - read more
Understanding Loan Terms and Conditions: A Guide for New Business Owners Understanding Loan Terms and Conditions: A Guide for New Business Owners
Starting a business often requires a substantial amount of capital, which many new business owners may not have readily available. Business loans can provide the necessary funding to help get your startup off the ground, from purchasing equipment to hiring staff and everything in between. - read more
Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals
Embarking on a business endeavor often requires substantial financial support, and securing a business loan can be a crucial step towards progress and expansion. A well-prepared loan application not only showcases your business in its best light but also significantly enhances the prospects of obtaining the needed funds. Attention to detail and a thorough understanding of the lending process can streamline your journey to approval. - read more
Commercial Property Financing: Top Strategies for Aussie Entrepreneurs Commercial Property Financing: Top Strategies for Aussie Entrepreneurs
In the entrepreneurial world, securing the right type of financing can be the catalyst for substantial business growth and success. Commercial property financing in Australia encompasses a range of options tailored to meet the diverse needs of businesses, each with its own set of advantages and intricacies. This article delves into the heart of strategic financing, providing Aussie entrepreneurs with guidance on navigating this vital aspect of their business ventures. - read more
From Setbacks to Success: Overcoming Credit Challenges and Fueling Business Growth From Setbacks to Success: Overcoming Credit Challenges and Fueling Business Growth
In the dynamic world of business, navigating credit challenges is a reality for many Australian business owners. These challenges can stem from various sources, including unpaid customer invoices, unexpected expenses, or the complexities of managing cash flow. Such hurdles often come at inopportune moments, leading to recurring stress for entrepreneurs trying to maintain a stable financial standing. - read more
From Application to Expansion: The Complete Roadmap to a Successful Business Loan Journey From Application to Expansion: The Complete Roadmap to a Successful Business Loan Journey
For many Australian entrepreneurs, a business loan is a vital step towards achieving growth and success. Access to capital can fuel expansion, help manage cash flow, and provide the necessary resources to capitalize on new opportunities. However, navigating the journey from application to approval, and eventually, to expansion, presents its own set of challenges. - read more
Mezzanine Finance: A Strategic Tool for Business Growth through Acquisition Mezzanine Finance: A Strategic Tool for Business Growth through Acquisition
Mezzanine finance represents a sophisticated instrument within the realm of corporate finance, often utilized as a strategic tool when more traditional forms of capital are not ideally suited or are insufficient for a firm's needs. Inherently, it serves as a hybrid between debt and equity financing, tailored to support growth initiatives such as business acquisitions. - read more
Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals
Embarking on a business endeavor often requires substantial financial support, and securing a business loan can be a crucial step towards progress and expansion. A well-prepared loan application not only showcases your business in its best light but also significantly enhances the prospects of obtaining the needed funds. Attention to detail and a thorough understanding of the lending process can streamline your journey to approval. - read more
Unlocking the Secrets to Flexible Business Financing in Australia Unlocking the Secrets to Flexible Business Financing in Australia
For emerging businesses seeking to navigate the vibrant economic currents of Australia, grasping the startup lending landscape is essential. A myriad of financing options, each with its distinct advantages and caveats, awaits the ambitious entrepreneur. In this sea of possibilities, securing the right funding becomes more than a mere necessity—it represents a decisive factor in charting the course toward business success. - read more
From Application to Expansion: The Complete Roadmap to a Successful Business Loan Journey From Application to Expansion: The Complete Roadmap to a Successful Business Loan Journey
For many Australian entrepreneurs, a business loan is a vital step towards achieving growth and success. Access to capital can fuel expansion, help manage cash flow, and provide the necessary resources to capitalize on new opportunities. However, navigating the journey from application to approval, and eventually, to expansion, presents its own set of challenges. - read more
Startup Loans vs. Business Lines of Credit: Which is Better for Your Company? Startup Loans vs. Business Lines of Credit: Which is Better for Your Company?
Starting a new business is an exciting journey, but it often requires a significant amount of funding to get off the ground. Whether it's for purchasing equipment, hiring staff, or marketing your new venture, securing the right type of financing is crucial for success. - read more
Understanding Loan Terms and Conditions: A Guide for New Business Owners Understanding Loan Terms and Conditions: A Guide for New Business Owners
Starting a business often requires a substantial amount of capital, which many new business owners may not have readily available. Business loans can provide the necessary funding to help get your startup off the ground, from purchasing equipment to hiring staff and everything in between. - read more
Secured vs Unsecured Business Loans: Which is Right for You? Secured vs Unsecured Business Loans: Which is Right for You?
In Australia, business loans are a crucial tool for companies looking to grow, expand, or manage cash flow. From small enterprises to large corporations, securing funding can mean the difference between success and failure. The financial landscape is diverse, offering various loan options tailored to different needs and business models. - read more

Finance News

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
Australian Online Retail Sees Continued Growth in May Amidst Nationwide Spending Surge Australian Online Retail Sees Continued Growth in May Amidst Nationwide Spending Surge
03 Jul 2025: Paige Estritori

Australian online retail sales experienced a modest rise in May, as consumers continued to invest in fashion, games, and toys. According to the latest figures from the National Australia Bank, there was a 0.7% increase in online sales for the month, compared to a 1.1% growth in April. Over the past year, Australians have spent approximately $63 billion on online retail purchases. - read more
Pay Boosts and Policy Changes: A Closer Look at Financial Updates for Australian Workers Pay Boosts and Policy Changes: A Closer Look at Financial Updates for Australian Workers
03 Jul 2025: Paige Estritori

The starting days of the new financial year bring significant changes for Australian workers, particularly those on minimum wage. As of Tuesday, the minimum wage will rise by 3.5 per cent, increasing hourly earnings to $24.95, or $948 weekly. This adjustment also affects award wages and comes as a response to rising living costs, outpacing current inflation rates. - read more
US Dollar Faces Historic Decline Amid Trump’s Tariff Policies US Dollar Faces Historic Decline Amid Trump’s Tariff Policies
03 Jul 2025: Paige Estritori

The US dollar has experienced an unprecedented decline, marking its worst first-half performance since 1973. Concerns surrounding President Donald Trump's tariff policies have intensified, leading to a substantial drop in the value of the world's primary reserve currency. Specifically, the dollar weakened by 10.7% against a basket of major trading partners' currencies in the first six months of the year, reminiscent of Nixon's era when the dollar was untethered from gold. - read more
Auditor Deregistered After Brite Advisers Collapse Auditor Deregistered After Brite Advisers Collapse
30 Jun 2025: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has deregistered auditor David Makowa, previously of DM Advisory Services, due to his role in the downfall of financial advice firm Brite Advisers. This decision follows Makowa's acceptance of a court-enforceable undertaking in which he agreed to surrender his auditor registration permanently, pledging never to re-apply. - read more
US Involvement in Israel-Iran Conflict Sparks Financial Market Concerns US Involvement in Israel-Iran Conflict Sparks Financial Market Concerns
23 Jun 2025: Paige Estritori

The escalating likelihood of the United States engaging militarily in the Israel-Iran conflict has raised alarm among investors, potentially leading to significant market volatility. This concern was highlighted by the global financial advisory firm, deVere Group, as tensions heighten in the Middle East. - read more
Global Markets Brace for Oil Price Surge Following US Strike on Iran Global Markets Brace for Oil Price Surge Following US Strike on Iran
23 Jun 2025: Paige Estritori

The recent US military attack on Iranian nuclear facilities has raised expectations of a significant oil price spike as global markets prepare to resume trading. Announced by former President Donald Trump, the attack marks an increased US involvement in the Middle East, which analysts believe could lead to heightened volatility across financial markets. - read more

Need Help Finding a Loan?
Loan Amount:
Postcode:
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Interest Rate Lock:
An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage for a specified time period.