Your rights if the repo man calls
The stench hits your nostrils before you reach the front door. Piles of discarded food sit quietly defrosting on the kitchen lino, in the empty space where the freezer used to be.
When debts turn bad, beware- the repo man cometh.
The murky underworld of debt collection and repossession tends to slip under the radar.
Now a long-awaited consumer law reform is rumbling down the halls of Parliament, threatening to crack down on moneylenders operating in the most vulnerable communities.
The latest development, released last week, is the Law Commission's review of the Credit (Repossession) Act. If all goes as planned, its extensive recommendations will be melded into another consumer credit law rejig that's currently underway.
All of which is good news for Raewyn Fox, chief executive of the Federation of Family Budgeting Services.
Fox heads a network of budget advisers who work at the coalface to clean up the mess caused by loan sharks, bad debt and financial illiteracy.
''One of the big problems we're still facing around repossession is contracts that have what's called APAP [all present and after-acquired property] clauses'', she says.
Usually, loans are secured against whatever purchase they are funding- a car, a TV, a new fridge. But the ''drag-net'' APAP loophole widens the scope to all personal property- meaning defaulting debtors can be systematically cleaned out until their loan is repaid.
Children's toys, beds, and in one particularly farcical case, a prosthetic limb. It would seem nothing is sacrosanct.
''It's better than it used to be, but it's still happening'', Fox says.
The crucial clause isn't necessarily concealed, but many people don't realise what they're getting into.
''They're desperate for the money, they sign the piece of paper, they don't read all the bits'', says Fox.
''The new Act will take care of that.''
The Credit Contracts and Consumer Finance Act is currently being amended to make sure any sneaky conditions are up front and in plain English.
The bill will also stop lenders using powers of attorney to appropriate all property. Then, if the Law Commission's suggestion to list every secured item is adopted, the APAP loophole will be closed beyond doubt.
However, the exhaustive review of credit repossession doesn't stop there. Amongst the Commission's wide-ranging recommendations are exemptions for repossessing bare basics _ like bedding, medical equipment, cooking equipment and washing machines.
Also suggested are a licensing scheme for repo men, and penalties for misconduct on the job.
But these ideas didn't all originate here.
National MP Sam Lotu-Iiga is the unsung hero in this saga. After seeing the damage irresponsible lending was causing in his Maungakiekie electorate, he drafted his own private members' bill.
That piece of legislation is now gathering dust on the sidelines, but a number of Lotu-Iiga's ideas _ like basic repossession exemptions and licensing _ have made the cut in the commission's proposal.
While he had his own strong views about what should happen, he's content with how things have panned out.
''I'm just happy that officials and the Law Commission have taken up parts of the bill'', he says.
''That was my purpose behind my bill _ to raise the profile of this area of law, to stimulate discussion around it.''
The law reform has supporters in all sorts of unlikely places. Ray Keenan, owner-operator of collection agency waiVISTA, is a far cry from your stereotypical thuggish debt collector.
''Scared? Of me?'' he says, incredulous. ''No, no. If I do a repossession, I try and go in there as a friend.''
That may sound like implausible but Keenan says his philosophy is to treat people as equals. Over his 25-year career he says there have only been three scary moments with hostile debtors.
Aggression breeds aggression, he says _ there's no place for confrontation.
''I'm too old for that! I'm not ten foot tall and bulletproof.''
Somewhat surprisingly, he supports the latest legislative tweaks, and reckons there are others in the industry who feel the same way.
Keenan will be glad to see the end of the catch-all APAP clauses, and thinks everything taken as security should be itemised on loan contracts.
''I try and steer away from household chattels.'' He hesitates. ''You have to do them, that's your job. But I don't take kids' stuff, I don't take kids' toys, I don't take bedding.''
Even more surprisingly, he's happy to be licensed, and thinks the entry criteria for his occupation should be made stricter to exclude anyone with criminal convictions.
As an industry veteran, Keenan has seen practices improve, particularly after the Credit (Repossession) Act in 1997.
''It probably just needs a bit more tidying up as well'', he says. ''I think this next part that they're doing now may help that.''
Early signs from Consumer Affairs Minister Simon Bridges suggest he, too, approves of the Law Commission's work. But even if he backs the changes all the way, will it be enough?
''Laws aren't worth a pinch of salt unless they're enforced'', says Lotu-Iiga.
The cowboys are out there, but no-one's reaching for the Sheriff's badge yet, he says.
Whoever does take the role must act appropriately and be well-resourced, Lotu-Iiga says.
They'll need to be, to fulfil his bold vision of matching the vigour applied to prosecuting finance company crooks.
''I'd like to see that level of enforcement.... for some of these unregulated, unscrupulous lenders that have been preying on these vulnerable people.''
The official jargon for the current state of affairs is ''self-enforcing''- but ''toothless'' might be closer to the truth.
However, Raewyn Fox is confident t the regulatory side of things is improving.
For example, all financial service providers now have to be registered and belong to an approved dispute resolution scheme.
''If the disputes resolution service suddenly gets 10 complaints about the same lender about the same thing, they can identify a systemic issue and then report to the FMA [Financial Markets Authority] or the Commerce Commission'', she says.
That gives people a more user-friendly avenue than the disputes tribunal or courts, and more importantly, it's free.
And once the lenders' bottom line is hurt, says Fox, they'll have to sit up and take notice.
While regulation is undeniably crucial, equally important is improving financial literacy, says Lotu-Iiga.
All consumers need to be better educated so they can make smarter financial choices in the first place.
On that note, we've provided some helpful legal tips for knowing your rights when the debt collector comes knocking, courtesy of Rainey Collins managing partner Alan Knowsley:
What if you don't think you owe money at all?
''Dispute the debt immediately with the creditor, in writing and giving a valid reason for doing so'', Knowsley says.
Provide evidence, or your applications could be brushed off as delaying tactics. Then if things escalate, as Fox has mentioned, there are disputes resolution services available. Finally, you can apply to the Court or disputes tribunal for relief.
2.Right to Repossess
Creditors can instruct repo men to take anything that is listed as security on the loan.
''The repossession agent can only take the secured goods, not anything else'', Knowsley says.
If you have an APAP clause, you may be able to challenge it. If and when the law is changed, essential items will be exempt and anything else must be specifically itemised on the contract.
You must receive at least 15 days notice of the repossession, or it cannot go ahead. Then you have another 15 days during which creditors must not sell your goods.
''If they turn up, they must show you the pre-possession notice and evidence that they are authorised to carry out the repossession'', says Knowsley.
If a debt collector insists that you pay them a fee, it's only valid if you knew about it before you bought the goods or services. Otherwise, says Knowsley, both creditor and collector may be in breach of the Fair Trading Act.
5.When Can They Come?
Between 6am-9pm Monday to Saturday, says Knowsley. If the Law Commission recommendation goes through, that will be extended to Sundays as well. It's an offence to obstruct repo men in their duty, so don't be argumentative.
6.Breaking and Entering
If you aren't home, repo men can break in, says Knowsley. They must leave the premises looking secure, but don't have to actually secure them.
Sometimes, says Fox, repossession notices are really sent out to scare people into action. It's worth contacting the creditor directly to see if an arrangement can be hashed out.