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Delayed debt recovery

In 2014 Matai borrowed $11,500 from a finance company to buy a car. Matai defaulted on the loan almost immediately. The finance company telephoned Matai and explained the loan was in arrears and asked when he would be able to catch up the payments. Matai promised to pay but when he didn’t, the finance company disabled the car. Matai and the finance company spoke again, but Matai was unable to make the payment as agreed.

In March 2015 the finance company decided to repossess and sell the car. The finance company posted Matai the following letters:

  • pre-repossession notice
  • repossession/seizure authority
  • post-repossession notice
  • notice of intention to sell
  • confirmation that the car had been sold for $2,154 and that Matai owed a residual debt of $11,000.

Matai did not hear from the finance company again until 2019, when a debt recovery agent contacted him advising the finance company intended taking court action to recover the $11,000. Matai said that he did not agree he owed $11,000 because the finance company had not followed the proper repossession process and he was surprised it would take so long for the finance company to chase payment. Matai did not receive a response to his email.

In 2020 the debt recovery agent contacted Matai again. Matai again replied that he had a complaint about the repossession process. The debt recovery agent suggested Matai refer his complaint to FCSL.



Matai said that he only received the final letter advising that the car had been sold. Matai said that he did not receive any other communication about the repossession and, if he had received the other letters, he would have acted differently. Matai said it was very stressful and inconvenient to have his car repossessed and asked for compensation.

The finance company said it had followed the correct repossession process and did not agree to pay compensation. However, the finance company was prepared to withdraw the debt from the debt recovery process if Matai would agree to repay the $11,000 debt at $35 a week.



We agreed that the finance company had followed the correct repossession process. The letters were sent to the correct address and we could not explain why Matai did not receive them.

Although Matai defaulted on the lending almost immediately, which would tend to indicate the lending was unaffordable, because the lending happened before 6 June 2015, we could not consider whether or not the finance company had met responsible lending guidelines introduced by the 2014 amendment to the Credit Contracts and Consumer Finance Act 2003.

However, we asked the finance company why:

  • it had taken so long to pursue the debt
  • a car purchased for $11,500 would sell for $2,154 only six months later.

The finance company did not have any information to properly answer these questions and offered to write off the $11,000 debt. The finance company also said it would use this case as a training opportunity for its collections team to ensure debt is pursued more quickly.



Matai accepted the finance company’s offer to write off the debt and the complaint was resolved on this basis.


Insights for consumers

If you think something is unfair, let us know. Although, in this case, the repossession process was correctly followed and the debt was legitimately owed, the delay in pursuing debt recovery for five years was not reasonable.