Every loan that settles is a prediction. The lender assessed the borrower’s income, verified their expenses, applied their credit policy, and concluded that the repayments were serviceable. Settlement confirmed that prediction.
Arrears management is what happens when the prediction turns out to be wrong, or when circumstances change in ways that no origination assessment could have anticipated.
For Australian non-bank lenders and asset finance providers, the quality of arrears management determines credit losses more directly than almost any other operational process. A missed payment identified and engaged with in the first week has a very different trajectory from one left unaddressed for a month. The same account, with the same borrower, produces a very different outcome depending on when and how the lender responds.
This article covers what arrears management involves at each stage, what Australian law requires of lenders when borrowers are in financial difficulty, what makes asset finance arrears operationally distinct, and what systems and processes actually move the needle on portfolio performance.
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What Loan Arrears Actually Means
The Definition and Why It Matters
Arrears means one or more scheduled payments on a loan or credit facility are overdue. The moment a contractual payment is not made on its due date, the account enters arrears.
This sounds simple. In practice it requires careful operational definition because the word arrears is used across multiple contexts that carry different implications: regulatory reporting, internal risk classification, contact strategy triggers, and credit reporting obligations each have their own thresholds and timelines.
For operational purposes, the most important thing to get right is the starting clock. Arrears begins when the payment was due, not when the lender notices it is missing and not when the borrower next makes contact.
Arrears vs Default vs Non-Performing Loan
These three terms are often used interchangeably but they are legally and operationally distinct.
Arrears is the condition of having one or more missed payments. It is a continuous state that begins at the first missed payment and persists until the account is brought current, modified, or escalated.
Default is a contractual event. It typically requires a specific number of missed payments or a specific amount of time past due, as defined in the credit contract. When a default event occurs, the lender may have the right to accelerate the outstanding debt, meaning the full loan balance becomes immediately due, and to take enforcement action. Default is a legal status, not just a measure of payment timing.
Non-performing loan is an accounting and regulatory classification. Under Australian and international standards, a loan is typically classified as non-performing when it is 90 or more days past due, or when repayment in full is assessed as unlikely without recourse to the security. The non-performing classification triggers specific provisioning requirements under APRA’s credit risk management guidance.
Understanding these distinctions matters for lenders because different actions and different obligations attach at each stage. A lender who treats early arrears as equivalent to default is applying the wrong response. A lender who does not recognise when an account has crossed from arrears into non-performing status may be under-provisioned.
The 2026 Australian Arrears Picture
The RBA’s March 2026 Financial Stability Review found that the share of non-bank housing lending in arrears remains below 1 per cent, only slightly above the equivalent rate at banks. This reflects the overall resilience of the Australian credit market through the rate-cutting cycle that began in February 2026 with the RBA reducing the cash rate from 4.10% to 3.85%.
However, the picture is not uniform. Data from Fitch Ratings showed a sharper-than-usual seasonal rise in arrears in the first quarter of 2025, with conforming mortgage arrears rising 23 basis points to 1.36% and non-conforming arrears rising 39 basis points to 5.32%. The non-conforming segment, which is where many non-bank lenders operate, shows meaningfully higher arrears rates and greater sensitivity to economic conditions than the conforming segment.
For asset finance specifically, the RBA’s liaison indicated that business loan arrears at non-bank lenders increased slightly through this period but remained contained. The asset-secured nature of asset finance lending provides a recovery mechanism that unsecured lending does not have, but it does not eliminate arrears risk and does not make the management of arrears any less operationally important.
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Why Early Intervention Is the Most Valuable Tool
The Cost Difference Between Early and Late Intervention
The single most consistent finding in collections research is that the probability of an account curing without formal recovery action falls sharply as the time past due increases.
An account contacted and engaged in the first 14 days after a missed payment resolves through automated reminders or a brief outbound call in the majority of cases. The borrower made an administrative error, had a bank account change, or experienced a one-off disruption that does not reflect their overall capacity to repay.
An account that reaches 60 days past due without meaningful lender engagement has a fundamentally different profile. The borrower’s financial position may have deteriorated further during the unaddressed period. The relationship between the borrower and the lender has been shaped by the absence of contact. The options available to both parties have narrowed.
The cost difference between these two outcomes is significant. Early-stage resolution requires minimal staff time and generates no legal costs. Late-stage recovery may require legal proceedings, repossession logistics, asset storage, remarketing, and deficiency recovery, all of which have material direct costs even before the credit loss itself is counted.
What Early Signals Look Like Before a Payment Is Missed
The most effective arrears management begins before a payment is missed.
Certain transaction-level signals predict arrears before the due date arrives:
- A direct debit dishonour in the days before the payment date, indicating insufficient funds in the nominated account
- A change in the account used for repayments without formal notification
- A pattern of payments arriving later in the cycle than in previous months, suggesting cash flow tightening
- Partial payments where the full instalment has historically been met
- Contact with the lender’s customer service team about payment difficulties
These signals do not confirm that a payment will be missed. They indicate elevated probability. A monitoring system that surfaces these signals and generates early outreach contact can resolve a proportion of potential arrears before they formally begin.
The 30-Day Window That Determines Most Outcomes
Research consistently shows that 30 days is the inflection point for arrears trajectories. Accounts resolved within 30 days of the first missed payment have high cure rates. Accounts that have been in arrears for more than 30 days without a payment arrangement or significant borrower engagement have materially lower cure rates.
This means the operational priority in arrears management is speed of initial engagement, not the sophistication of the collections process. A well-structured contact strategy in the first 30 days outperforms a sophisticated recovery process that begins at 60 days.
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Arrears Segmentation: Not All Accounts Are the Same
The Day-Bucket Classification System
Lenders manage arrears portfolios through a day-bucket classification system that groups accounts by how many days past due they are. This is the operational framework that determines which contact strategy, which escalation path, and which hardship or restructuring options apply to each account.
The standard Australian day-bucket structure is:
- **1 to 29 days past due** — early arrears. The majority of accounts in this bucket resolve without formal collections action.
- **30 to 59 days past due** — moderate arrears. Active engagement required. Hardship assessment may be appropriate.
- **60 to 89 days past due** — serious arrears. Formal collections activity. Enhanced oversight and escalation triggers.
- **90 days and beyond** — late arrears or non-performing. Recovery track, legal options, and for secured lending, enforcement of security.
These buckets are not just reporting categories. They are operational triggers. When an account moves from one bucket to the next, a specific set of actions should follow automatically, not when someone notices the movement has occurred.
What Segmentation Determines in Practice
Arrears segmentation determines the intensity and type of intervention applied to each account. An account in the 1 to 29 day bucket receives automated communication. An account in the 30 to 59 day bucket triggers an outbound call and a financial assessment. An account in the 60 to 89 day bucket is placed on closer monitoring with formal documentation of all contact and offers made.
Segmentation also determines staffing allocation. Collections officers are a finite resource. A well-segmented portfolio directs their attention to the accounts that require human engagement, rather than distributing effort uniformly across all arrears accounts regardless of severity.
How Risk Tier From Origination Informs Collections Strategy
The credit assessment conducted at origination contains information that remains relevant throughout the loan lifecycle, including during collections.
A borrower who was assessed as low risk at origination, with strong verified income, clean credit history, and stable employment, who falls into early arrears for the first time, is likely to be experiencing a temporary disruption rather than structural financial stress. The appropriate response is prompt but non-escalatory engagement.
A borrower who was assessed at a higher risk tier at origination, who has experienced payment irregularities in earlier months, and who is now in 30-day arrears, presents a different profile. The collections response should reflect the elevated probability that this account will progress through the buckets without a payment arrangement.
A connected lending platform that makes origination data visible to the collections team enables this differentiated approach. A collections officer working from a separate system who cannot see the original credit assessment is operating without context that would improve their triage decisions.
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The Contact Strategy Across Arrears Stages
Days 1 to 14 — Automated Reminders
The first response to a missed payment should be automated, fast, and non-confrontational.
An automated SMS or email sent within 24 to 48 hours of the missed payment due date serves several purposes. It notifies the borrower of the missed payment, it provides the payment options clearly, and it creates a documented contact record that forms the beginning of the audit trail for this arrears event.
At this stage, the tone should be service-oriented rather than collections-oriented. Many missed payments at this stage are administrative. The borrower may not know the payment failed. The communication should make it easy for them to resolve the situation immediately, not defensive.
The automated reminder should include the amount overdue, the due date, the payment options available, and a contact number if the borrower has questions. It should not include threats or references to credit reporting or legal action.
Days 15 to 30 — Outbound Engagement
If the automated reminder at days one to fourteen has not produced a payment or a contact from the borrower, the account should move to an outbound call from the collections team.
The purpose of this call is to verify the borrower’s situation, understand why the payment was missed, and arrive at one of three outcomes: a payment made immediately, a committed payment date within the next few days, or an identified need for a hardship assessment.
The call script at this stage should be empathetic and solution-focused. The collections officer should verify the borrower’s identity, confirm the missed payment, ask an open question about the reason, and listen before presenting options.
What the collections officer learns in this call shapes everything that follows. A borrower who missed a payment because their salary was late and has already re-established the direct debit needs no further action. A borrower who has lost their job and has no clear plan for future repayments needs a hardship pathway.
Days 30 to 60 — Financial Assessment and Hardship Pathway
An account that has reached 30 days past due without a payment or a clear resolution is entering the stage where a formal financial assessment becomes appropriate.
The financial assessment involves collecting information about the borrower’s current income, expenses, and capacity to repay. It is both a collections tool and a compliance requirement. ASIC’s expectations for lenders under the NCCP Act’s hardship provisions require that lenders conduct a genuine assessment of a borrower’s circumstances before making decisions about modifications to their credit contract.
At this stage the collections officer should be working with documented scripts, standardised assessment templates, and a clear record of every offer made and every response received. The documentation created at this stage is the evidence a lender may need to demonstrate to ASIC or AFCA that their hardship process was genuine.
Where the financial assessment reveals that the borrower is experiencing genuine financial difficulty, the hardship pathway begins.
Days 60 to 90 — Escalation and Formal Options
An account that has reached 60 days past due without a payment arrangement in place, or where an arrangement has been made and then broken, requires escalation.
At this stage, formal collections activity replaces customer service outreach. This includes written notices of arrears, formal documentation of the outstanding amount and the consequences of continued non-payment, and the beginning of the process that may lead to legal action.
For secured asset finance lending, this is also the stage where the lender begins assessing the condition and location of the security asset and whether voluntary surrender or formal repossession is likely to be required.
All communications at this stage should be recorded. Contact attempts that do not result in a connection, letters sent, emails sent, and any responses received must all be in the file. This documentation supports both the collections process and any subsequent legal proceedings.
Days 90 and Beyond — Recovery and Legal Track
An account at 90 days past due has met the threshold for non-performing loan classification under most regulatory frameworks. At this point, the options available to the lender are: a restructured arrangement that returns the account to performing status, sale of the debt to an external collections agency, legal proceedings to recover the outstanding balance, or for secured lending, enforcement of the security through repossession and sale of the asset.
The decision between these options depends on the outstanding balance, the borrower’s assets and financial position, the value and condition of the security asset, and the legal and operational costs involved in each path.
The formal demand letter, served at or before 90 days, initiates the legal process and sets the clock on timelines that are defined by the credit contract and any applicable legislation.
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Hardship Obligations Under the NCCP Act
What the NCCP Act Requires
The National Consumer Credit Protection Act 2009 imposes specific hardship obligations on lenders that apply to consumer credit products, including personal asset finance and vehicle finance where the borrower is an individual and the credit is predominantly for personal purposes.
Under the Act, a borrower who is experiencing financial difficulty can request that the lender consider a change to their credit contract. This is a statutory right. The lender must give proper consideration to the request. The lender cannot simply decline without assessment.
The obligation applies from the moment a borrower indicates they are in financial difficulty, whether that is through a formal written hardship notice or through a conversation with the collections team.
The Hardship Assessment Process
A genuine hardship assessment involves collecting information about the borrower’s current financial situation, understanding the nature and expected duration of the difficulty, and assessing whether a modified arrangement would allow the borrower to meet their obligations.
The assessment should cover:
- Current income from all sources, including any changes since origination
- Essential living expenses at current levels
- The nature of the financial difficulty: job loss, illness, relationship breakdown, or other cause
- Whether the difficulty is temporary or ongoing
- Whether the borrower has financial buffers such as savings or assets
The lender should document what information was provided, what was assessed, what was offered, and what the outcome was. This documentation is the evidence base that ASIC and AFCA expect to see if the lender’s hardship practices are reviewed.
ASIC’s expectations are that hardship assessments are conducted promptly, that the borrower is informed of the outcome in writing, and that the lender’s response reflects a genuine consideration of the borrower’s circumstances rather than a default position of refusal.
Contract Modification Options
When a hardship assessment concludes that a modified arrangement is appropriate, the lender has several options. These are not all available in every situation, and the appropriateness of each depends on the nature and duration of the financial difficulty:
Payment deferral temporarily suspends repayments for a defined period. Interest continues to accrue during the deferral period, and the deferred payments are added to the end of the loan term or recalculated as higher future instalments.
Reduced repayment period temporarily reduces the repayment amount to an interest-only or partial-principal level. This provides immediate cash flow relief while keeping the loan active.
Term extension extends the loan term, reducing each instalment amount while maintaining the same total repayment obligation spread over a longer period. This is appropriate where the borrower’s financial difficulty is expected to be ongoing but not permanent.
Fee waiver removes any arrears fees, default fees, or other charges that have accumulated during the arrears period. This is often offered in combination with another modification rather than as a standalone response.
Restructured repayment plan agrees a specific catch-up schedule that brings the account current over a defined period while maintaining the original loan terms.
Each modification should be documented in an updated credit contract or a formal variation agreement. The modified terms are what the lender monitors from the point of modification forward.
Documentation Requirements
Every step of the hardship process must be documented in a format that can be retrieved and produced on request. ASIC’s expectations include:
- A record of when the hardship request was received
- A record of what information was collected in the assessment
- A record of what was offered and when
- A copy of any modification agreement entered into
- A record of the borrower’s response to any offer
- A record of the outcome and the date it was communicated
These records must be retained as part of the broader compliance record for the credit contract, subject to the seven-year retention requirement under the NCCP Act.
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Arrears in Asset Finance: The Specific Challenges
What Makes Asset Finance Arrears Different From Mortgage Arrears
Mortgage arrears management operates in a context where the security asset (the property) is typically appreciating, where the borrower usually has strong incentives to maintain their home, and where the repossession and sale process is lengthy and expensive for both parties.
Asset finance arrears is operationally different in several important ways.
First, the security asset depreciates. A vehicle financed over five years is worth significantly less at the end of year three than it was at settlement. The loan-to-value ratio, which may have been conservative at origination, changes throughout the loan term in a direction that reduces the lender’s recovery position if repossession becomes necessary.
Second, assets can be moved, hidden, or damaged. A vehicle in arrears can be driven across state lines. Equipment can be relocated to a different business address. A chattel mortgage secured against an asset whose location the lender does not know is more difficult to enforce than one where the asset can be readily located.
Third, the repossession process for assets is typically faster and less legally complex than mortgage enforcement, but it still requires compliance with specific statutory processes in each state and territory.
Repossession as the Terminal Option
Repossession of a financed asset is the enforcement action that follows when all other arrears management options have been exhausted and the credit contract has reached a default event.
The process involves formal notice to the borrower, coordination with the repossession agent to locate and recover the asset, confirmation that the asset has been secured, and transport to a storage or auction location.
Before repossession is initiated, the lender should confirm the current location of the asset where possible, confirm that the asset remains insured (insurance may have lapsed in cases of financial stress), and confirm that the repossession process complies with the relevant state legislation. Different states and territories have different rules about how repossession must be conducted and what notice must be given.
The repossession itself does not resolve the debt. It recovers the asset. The lender then needs to sell the asset and apply the net proceeds against the outstanding balance.
PPSR and Security Enforcement
The Personal Property Securities Register registration from settlement is what gives the lender the legal right to enforce their security in a repossession scenario.
Before commencing enforcement, the lender should conduct a PPSR search to confirm their registration is current and accurate, and to identify any subsequent registrations by other creditors that might affect priority.
In an insolvency scenario, the priority of the lender’s claim over the asset depends on the correctness of the PPSR registration. A registration that contains an error in the VIN or serial number may be defective, potentially allowing a liquidator to argue that the security interest is not perfected and therefore not enforceable against the general pool of unsecured creditors.
Remarketing and Deficiency Recovery
Once a repossessed asset is sold, the net proceeds are applied against the outstanding loan balance. In the order of application, this typically means recovery costs first, then accrued interest and fees, then outstanding principal.
If the net sale proceeds exceed the outstanding balance, the surplus is returned to the borrower. If the net proceeds are insufficient, the remaining balance is a deficiency that the borrower continues to owe.
Remarketing a repossessed asset requires accurate valuation to establish a realistic reserve price. Glass’s Guide is the standard reference for motor vehicle valuations in Australia and is typically used to establish the market value of a repossessed vehicle before sale. Using an appropriate valuation source and maintaining documentation of the valuation and the sale price is important both for defending the sale in any subsequent dispute and for calculating the deficiency accurately.
The deficiency amount, once calculated, moves from the secured lending category to an unsecured receivable. Recovery of the deficiency depends on the borrower’s financial position and may require legal proceedings if the borrower does not voluntarily settle.
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How Lenders Measure Arrears Portfolio Health
Core Arrears Metrics
Portfolio-level arrears monitoring requires a consistent set of metrics that are calculated and reported on defined cadences.
Arrears rate is the most fundamental measure. It is calculated as the total past-due balance divided by the total loan balance. An arrears rate of 2% means that 2% of the portfolio by outstanding balance is overdue.
Delinquency rate measures the proportion of accounts in arrears, regardless of balance. This is useful alongside the arrears rate because a small number of large-balance accounts can inflate the arrears rate while the delinquency rate tells the portfolio manager how many accounts require attention.
Cure rate measures the proportion of arrears accounts that return to current status in a given period. A high cure rate in the 1 to 29 day bucket indicates that early intervention is effective. A declining cure rate over successive reporting periods signals a deteriorating portfolio.
Flow rate measures the proportion of performing accounts that move into arrears in a given period. A rising flow rate is an early warning signal that new arrears are being generated faster than existing arrears are resolving.
Roll-Rate Analysis
Roll-rate analysis tracks the movement of accounts between day-buckets over time. It answers the question: of the accounts that were in the 30-day bucket last month, what proportion moved to the 60-day bucket this month, what proportion cured, and what proportion stayed in the 30-day bucket?
Roll-rates allow lenders to model expected future arrears based on current portfolio composition. If the roll-rate from 30 to 60 days is elevated compared to historical norms, and the flow rate into early arrears is also elevated, the lender can project that 90-day arrears will increase in approximately two months without intervention.
This forward-looking capability is what separates an arrears management function that is reacting to problems from one that is anticipating them.
Vintage analysis extends the roll-rate picture by tracking loan cohorts from origination. A vintage analysis shows whether loans originated in a particular quarter or under a particular set of credit criteria are performing better or worse than loans from other periods. Elevated arrears in a specific vintage often signal a specific underwriting issue that can be identified and corrected in current origination.
KPIs and Reporting Cadence
A well-functioning arrears management operation reports at multiple frequencies matched to the decision-making cycle of each audience.
Daily reports for collections team leaders cover the accounts entering early arrears, direct debit failures from the previous night, open hardship cases with action due, and the top accounts by outstanding balance in each bucket.
Weekly reports for operations managers cover arrears rates by bucket and product, contact rates and resolution rates for the week, hardship cases opened and closed, and any accounts moving to formal escalation.
Monthly reports for credit risk and senior management cover portfolio-level arrears rates with trend analysis, cure rates and flow rates, vintage performance, provision coverage, and any emerging concentration risk by product type, geography, or origination channel.
Quarterly reports for board-level oversight cover arrears trends versus portfolio plan, stress test outcomes, regulatory reporting positions, and any significant changes in the profile of hardship cases.
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What Lending Software Must Support in Arrears Management
For Australian non-bank lenders and asset finance providers, the software supporting arrears management determines whether the collections team is managing accounts or managing paperwork. A system that surfaces signals, enforces workflows, and generates documentation automatically allows the collections function to focus on the cases that require human judgment.
| Capability | Why It Matters in Arrears Management |
|—|—|
| Automated early warning triggers | Detects failed direct debits, payment pattern changes, and pre-due date signals before arrears formally begin |
| Day-bucket classification and auto-escalation | Accounts automatically assigned to the correct bucket and escalated when bucket criteria are met |
| Configurable contact sequence automation | SMS, email, and call tasks generated at defined intervals per segment without manual initiation |
| Hardship workflow with structured assessment | Dedicated hardship pathway with documented steps, timeframes, and outcome recording |
| Contract modification tools | Repayment schedule, direct debit, and contract terms updated automatically when an arrangement is agreed |
| Receipt and payment tracking | Real-time update of account status when payments are received against arrears balances |
| Repossession and remarketing workflow | Structured process from formal notice through asset recovery, valuation, sale, and deficiency calculation |
| Portfolio arrears reporting | Real-time arrears rate, cure rate, flow rate, and roll-rate reporting by bucket, product, and vintage |
| Origination data visible to collections | Collections officer can see the original credit assessment and risk tier without switching systems |
| NCCP hardship documentation | Every hardship step timestamped and attributed for ASIC compliance evidence |
| Audit trail through collections | Every action logged, every communication recorded, every outcome documented |
For Australian asset finance lenders looking for a platform where arrears management is connected to the full contract lifecycle, the [ Lender Platform by Credit Objects](https://creditobjects.com.au/lender-platform/) manages collections through its Contract Management System. The CMS module covers arrears management, customer service tools, receipts and payment tracking, credit and debit notes, repossession and remarketing, contract modification, and day-end and month-end processes. The collections workflow is connected to the origination records and settlement data, so the collections team has the full contract history and credit assessment available without leaving the platform. This [loan servicing and collections software](https://creditobjects.com.au/lender-platform/) ensures the arrears management workflow operates as part of the contract lifecycle rather than as a separate process disconnected from the rest of the lending operation.
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Frequently Asked Questions
What is the difference between arrears, default, and non-performing loan?
Arrears means one or more scheduled payments are overdue. Default is a contractual breach event that typically occurs after a defined period of arrears or other covenant breach, and which gives the lender specific enforcement rights including acceleration of the debt. A non-performing loan is an accounting and regulatory classification that typically applies at 90 or more days past due, or when repayment without recourse to security is assessed as unlikely. These are sequential stages: arrears comes first, default is triggered by sustained arrears, and non-performing is the regulatory classification that applies once the account reaches the 90-day threshold.
What are a lender’s hardship obligations under Australian law?
Under the National Consumer Credit Protection Act 2009, lenders must give proper, documented consideration to a request from a borrower experiencing financial difficulty to vary the terms of their credit contract. The lender must assess the request, respond within defined timeframes, and document the process and outcome. A default position of refusal without assessment does not satisfy the obligation. ASIC’s guidance on hardship requires prompt engagement, a thorough financial assessment, and a written response. These obligations apply to consumer credit products including personal asset finance and vehicle finance.
How does arrears management differ in asset finance compared to mortgage lending?
Asset finance arrears management has specific features that mortgage arrears does not. The security asset depreciates throughout the loan term, reducing the lender’s recovery position as time passes. Assets can be relocated or damaged, creating a practical challenge in enforcement that does not exist with property. The repossession process is generally faster and less legally complex than mortgage enforcement but requires compliance with state-specific legislation. And the remarketing of repossessed assets requires valuation using appropriate references such as Glass’s Guide for vehicles and creates a deficiency calculation if proceeds are insufficient to clear the outstanding balance.
What should an arrears contact strategy look like for an asset finance lender?
An effective contact strategy maps specific actions to day-bucket thresholds. Automated reminders in the first 14 days handle the majority of early arrears that resolve through administrative correction. Outbound calls from the collections team at 15 to 30 days identify the nature of the difficulty and arrive at an immediate resolution or identify the need for a hardship assessment. Formal financial assessments and hardship pathway engagement happen at 30 to 60 days. Escalation to formal collections with written notices and enhanced oversight occurs at 60 to 90 days. Legal and repossession tracks open at 90 days. The entire strategy should be enforced by the system through automated triggers and task generation, not managed through individual collections officer memory.
What metrics should a lender use to monitor arrears portfolio health?
The core metrics are the arrears rate (past-due balance divided by total portfolio balance), the delinquency rate (proportion of accounts in arrears), the cure rate (proportion of arrears accounts returning to current in a given period), and the flow rate (proportion of performing accounts moving into arrears). Roll-rate analysis tracks movement between day-buckets to model future arrears trajectories. Vintage analysis tracks cohort performance from origination. These metrics should be reported daily for operational teams, weekly for management, and monthly and quarterly for credit risk and board oversight.
How does repossession work in Australian asset finance lending?
Repossession is the enforcement of the lender’s security interest in a financed asset after the credit contract has reached a default event and all other resolution options have been exhausted. The process involves formal notice to the borrower, coordination with a repossession agent to locate and recover the asset, confirmation of PPSR registration currency and accuracy, transport to a storage or auction facility, valuation of the asset using an appropriate reference (Glass’s Guide for vehicles), and sale through an appropriate channel. Net proceeds are applied against the outstanding balance. If proceeds are insufficient to cover the debt and costs, the remaining balance is a deficiency that the borrower continues to owe as an unsecured liability.
