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Repossession and remittance of items paid in instalments

If an item, usually a car, has been sold by hire purchase and the buyer has defaulted on the instalments, the seller has the right to repossess the item.

Repossession is possible when the duration and unpaid amount of the payment default fulfil the statutory minimum requirements. The seller is then entitled to ask the enforcement officer for executive assistance in repossessing the item.

If the seller repossesses the item due to the buyer’s default, a settlement must be made between the seller and buyer. This means defining the buyer’s obligation to the seller arising from the buyer’s breach of contract with regard to the hire purchase item.

The buyer and seller can agree on the settlement made between them. If they are unable to reach an agreement, the enforcement officer will perform the settlement.

The enforcement officer will perform the settlement also in the following cases:

  • the enforcement officer has provided executive assistance to the seller in repossessing the item; or
  • the item is distrained from the buyer’s other debts not related to the hire purchase.

‍Remittance of items paid in instalments

The item’s value at the time of repossession is determined in the settlement. This value will be credited to the buyer in the settlement, while unpaid instalments that have fallen due or are yet to fall due, interest on past-due instalments, the necessary costs incurred by the seller from the item’s repossession and the fees that the seller must pay to gain possession of the item are credited to the seller. Such costs and fees can include, for example costs incurred from the item’s evaluation or transport.

If the item’s value is greater than the amount credited to the seller in the settlement, the seller will pay the difference to the buyer. Correspondingly, if the item’s value is less than the amount credited to the seller in the settlement, the buyer must pay the difference to the seller.

The item will remain in the possession of the seller after the settlement.

A record is drawn up for a settlement performed by an enforcement officer, and the record can be appealed to a district court.

A settlement record drawn up by an enforcement officer constitutes grounds for enforcement, i.e. receivables based on a settlement performed by an enforcement officer can be enforced by virtue of the settlement record.