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  • FIRST POST
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 11:30 AM
    • 92Posts
    • 76Thanks
    Ebonydeluxe
    Voluntary repossession or forced prior to bankruptcy
    • #1
    • 14th Nov 17, 11:30 AM
    Voluntary repossession or forced prior to bankruptcy 14th Nov 17 at 11:30 AM
    Hi all,

    After posting my initial questions on the DFW board (http://forums.moneysavingexpert.com/showthread.php?t=5740183)
    I have discussed my situation in more detail with StepChange and made some changes to my SOA to reflect what I should actually be spending as oppossed to scrapping by as I have to cover the large debt burden. It is now recommended that I go bankrupt.

    I have one question though while I am planning for this bankruptcy. I have two cars on finance. One will have to be repossessed, the other I am going to make the case for keeping due to health, work and family circumstance. For the vehicle that will have to be repossessed, I want the shortfall to be added to the bankruptcy as unsecure debt, so it has to be completed before I make my bankruptcy application.

    Should I contact the finance company and voluntarily have the car repossessed or stop paying and have the car forcibly repossessed due to missed payments?

    I am in the process of writing to all my creditors and informing them that my financial situation has changed I am currently unable to make my minimum payments and offering a token payment in the meantime (using the StepChange template letter).

    I will continue to pay for the vehicle I am hoping to keep. As these are secured debts I am liable to pay for them anyway, even with the bankruptcy. The key here is about having the shortfall in finance added to the bankruptcy.
    Hoping to be debt free for life!
Page 1
    • StopIt
    • By StopIt 14th Nov 17, 12:20 PM
    • 1,371 Posts
    • 1,169 Thanks
    StopIt
    • #2
    • 14th Nov 17, 12:20 PM
    • #2
    • 14th Nov 17, 12:20 PM
    If you hand over the car, any shortfall becomes unsecured debt, and will be included in any subsequent bankruptcy.


    The 2nd option should result in the same, but may be a little messier.


    How much is the car worth that you're wanting to keep. An OR generally will not let you keep paying a debt in BR, nor keep an asset like a car worth more than £1,000.
    I'm a Board Guide on the Debt Free Wannabe, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

    In debt and looking for help? Look here for the MSE Debt Help Guide.
    Also, If you need any free and impartial debt advice, the National Debtline, Stepchange, and the CAB can help.
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 1:45 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    • #3
    • 14th Nov 17, 1:45 PM
    • #3
    • 14th Nov 17, 1:45 PM
    Hiya StopIt,

    I have found your support invaulable to date. Thank you!

    The car is worth around £6000 at best, the outstanding finance is £8,000+. Does the OR look at worth after finance or just value on the open market.

    I will not be able to go to work without the car. I wouldn't even be able to buy a new vehicle with a smaller value. Will I have the opportunity to make the case under health grounds and family circumstances?

    I think I don't need to do anything then and just wait for the official reciever to tell me to hand the car back right?

    Thanks in advance.
    Hoping to be debt free for life!
    • StopIt
    • By StopIt 14th Nov 17, 2:18 PM
    • 1,371 Posts
    • 1,169 Thanks
    StopIt
    • #4
    • 14th Nov 17, 2:18 PM
    • #4
    • 14th Nov 17, 2:18 PM
    Hiya StopIt,

    I have found your support invaulable to date. Thank you!

    The car is worth around £6000 at best, the outstanding finance is £8,000+. Does the OR look at worth after finance or just value on the open market.

    I will not be able to go to work without the car. I wouldn't even be able to buy a new vehicle with a smaller value. Will I have the opportunity to make the case under health grounds and family circumstances?

    I think I don't need to do anything then and just wait for the official reciever to tell me to hand the car back right?

    Thanks in advance.
    Originally posted by Ebonydeluxe

    They use a certain valuation firm, that I can't put my finger on, but it's usually on the conservative side.


    If you had owned the car outright, it would be a fight to keep as they could argue you could sell it and buy a cheaper one, with the difference going to the OR. As it's owned by the finance company technically, it makes it less likely they'll let you keep it, as you normally cannot make any debt payments other than to the OR in BR proceedings.


    https://www.stepchange.org/debt-info/bankruptcy-and-my-car.aspx


    They MAY allow you to continue making payments, but if the finance ends during the BR, they take ownership of the car. Because it is a high (relatively speaking) debt, they can still say no.
    Last edited by StopIt; 14-11-2017 at 2:21 PM.
    I'm a Board Guide on the Debt Free Wannabe, Credit Cards and Loans boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com

    In debt and looking for help? Look here for the MSE Debt Help Guide.
    Also, If you need any free and impartial debt advice, the National Debtline, Stepchange, and the CAB can help.
    • Sparx
    • By Sparx 14th Nov 17, 2:26 PM
    • 763 Posts
    • 413 Thanks
    Sparx
    • #5
    • 14th Nov 17, 2:26 PM
    • #5
    • 14th Nov 17, 2:26 PM
    I would look at your options to 'voluntary terminate' and hand the vehicle back, typically you are liable for 50% of the total amount payable. Have you got a copy of your agreement? Usually it says under the 'Termination'' section how much you have to pay to meet this point to VT. You can still do it before 50% it's just you will owe the difference which is then unsecured.

    As mentioned the debt becomes unsecured. I would speak with Stepchange first and ask if they agree with the logic, as you can then include the remaining unsecured debt in your bankruptcy hopefully.
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 2:44 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    • #6
    • 14th Nov 17, 2:44 PM
    • #6
    • 14th Nov 17, 2:44 PM
    I still have four years left on the car I wish to keep. So I would own after the bankruptcy. I would find it very difficult to work if I did not have a car to get to work. The earliest drop off time for my children's childcare is 7:15am and I have to be at work for 8:00am. I am just about making it in on time as it is. And this of course is if everything goes to plan and there are no tantrums, nothing is forgotten, etc.

    Even if I was to take public transport, which I did have to when my car was in for repairs, there is not a route that would get me to work for 8am. The earliest would be 8:20-8:30. On one occassion I arrived at work for 9:45 because there were cancelations. Please note I am at risk of redundancy already so rocking up late will not be a positive thing.

    The journey and route is not suitable for cycling and I would still face the same time issues. Surely an OR would take this into account. In this instance I would have no choice but to resign from my job and hunt for a new one, which in reality will be difficult while pregnant, but not impossible. And I will also lose out on my current employer making maternity payments.
    Hoping to be debt free for life!
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 2:48 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    • #7
    • 14th Nov 17, 2:48 PM
    • #7
    • 14th Nov 17, 2:48 PM
    Sparx - I looked at my agreement and I will be doing this with one of the vehicles.

    I just want to keep one, I have two on HP.

    One of things that is bothering me though, is that the agreement for the car I wish to keep says they can terminate the contract if I enter into a DMP with another creditor. So I may not get to keep anyway. But to be honest, how would they know I had entered into a DMP or other debt management plan?
    Hoping to be debt free for life!
    • tigerfeet2006
    • By tigerfeet2006 14th Nov 17, 6:24 PM
    • 13,800 Posts
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    tigerfeet2006
    • #8
    • 14th Nov 17, 6:24 PM
    • #8
    • 14th Nov 17, 6:24 PM
    How much are the repayments a month?
    BSCno.87
    The only stupid question is an unasked one
    I now live in a country that is 4 hours ahead of the UK so you may now find I post at weird times
    [/COLOR][/CENTER]
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 7:45 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    • #9
    • 14th Nov 17, 7:45 PM
    • #9
    • 14th Nov 17, 7:45 PM
    £180 per month
    Hoping to be debt free for life!
    • Sparx
    • By Sparx 14th Nov 17, 8:07 PM
    • 763 Posts
    • 413 Thanks
    Sparx
    Sparx - I looked at my agreement and I will be doing this with one of the vehicles.

    I just want to keep one, I have two on HP.

    One of things that is bothering me though, is that the agreement for the car I wish to keep says they can terminate the contract if I enter into a DMP with another creditor. So I may not get to keep anyway. But to be honest, how would they know I had entered into a DMP or other debt management plan?
    Originally posted by Ebonydeluxe
    Does your OP not say you are filing for bankruptcy, not to arrange a DMP?

    Either way, usually the DMP/Insolvency firm will ask/check for all of your creditors. If you don't tell them they'll see it on your I&E form. Not always but sometimes they write to debtors even if not included in any reduced offer - just so the debtor is aware the client is going into a DMP, IVA or Bankruptcy.

    The clause that allows the HP to terminate the agreement, I would presume is not heavily enforced if you are able to keep the vehicle and repayments up with them. It's likely there just to cover them that should you enter a DMP/IVA etc they have legal rights still to exercise and repossess if necessary.

    It will be down to your IP if you're able to keep one of the vehicles. If it helps and speaking from experience, as long as the monthly repayments are not extortionate (£180 isn't too bad) the IPs I often hear from allow the vehicle to be kept. But higher value vehicles/repayments are sometimes deemed not fit for purpose whilst going bankrupt, so advise you VT or allow repossession.
    Last edited by Sparx; 14-11-2017 at 8:12 PM.
    • Ebonydeluxe
    • By Ebonydeluxe 14th Nov 17, 8:53 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    I thought my comment might seem confusing. Yes I am going to apply for bankruptcy, not DMP. What I meant to explain fully was that I can’t find any mention in the HP agreement specific to insolvency/bankruptcy, but took their clause regarding “DMP and other debt management” to include bankruptcy. In other words, I am assuming that if I go bankrupt they will treat this as entering a debt solution/management and seek to terminate the contract.
    Hoping to be debt free for life!
    • tigerfeet2006
    • By tigerfeet2006 15th Nov 17, 12:28 PM
    • 13,800 Posts
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    tigerfeet2006
    Yes they will. It's quite rare, although not unheard of, for a firm to let you continue to pay the HP in BR.

    Two options I can think of are
    A) stop paying for the cars and save the money to buy a cheap car (£1k-1.5k max) when they reposes the cars and put the debt into the BR.

    B) do you have anyone who could take over the agreement and pay it for you and they let you drive and insure etc. the car.
    BSCno.87
    The only stupid question is an unasked one
    I now live in a country that is 4 hours ahead of the UK so you may now find I post at weird times
    [/COLOR][/CENTER]
    • tigerfeet2006
    • By tigerfeet2006 15th Nov 17, 12:30 PM
    • 13,800 Posts
    • 29,882 Thanks
    tigerfeet2006
    Yes they will. It's quite rare, although not unheard of, for a firm to let you continue to pay the HP in BR.

    Is it £180 for both or just one, so £360 total.

    Two options I can think of are
    A) stop paying for the cars and save the money to buy a cheap car (£1k-1.5k max) when they reposes the cars and put the debt into the BR.

    B) do you have anyone who could take over the agreement and pay it for you and they let you drive and insure etc. the car.
    BSCno.87
    The only stupid question is an unasked one
    I now live in a country that is 4 hours ahead of the UK so you may now find I post at weird times
    [/COLOR][/CENTER]
    • Ebonydeluxe
    • By Ebonydeluxe 15th Nov 17, 3:10 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    I pay £180 for one, the other is substantially more.

    I am worried that if I don't pay on this vehicle I will risk the opportunity to argue my case that I wish to keep the car and can continue to pay. The other vehicle I will definitely stop paying.

    I have now completed my bankruptcy form and awaiting pay day to pay it.

    Thank you for your wisdom.
    Hoping to be debt free for life!
    • tigerfeet2006
    • By tigerfeet2006 15th Nov 17, 3:41 PM
    • 13,800 Posts
    • 29,882 Thanks
    tigerfeet2006
    I honestly don't think that you will get to keep the car from prior experience of being on these boards for 11 years. I honestly think you should stop paying the HP for a couple of months and use the money that you save for a couple of months to buy a car for £1k-1.5k. They won't repossess the cars immediately, you'll have at least 2 months before they take the cars. Once you have the car sorted then go BR.

    Do you have a basic bank account sorted?

    Get your ducks in a row before rushing into BR.
    BSCno.87
    The only stupid question is an unasked one
    I now live in a country that is 4 hours ahead of the UK so you may now find I post at weird times
    [/COLOR][/CENTER]
    • Ebonydeluxe
    • By Ebonydeluxe 15th Nov 17, 4:13 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    I have drafted all the creditor letters, with account numbers, etc. But not sent just yet.

    I have opened a new account with no overdraft facility, but I need to go into branch and ask them to change this into their very basic account.

    I have changed my bank details to have my payments put into my the new account.

    Going to work on switching the direct debits for essential bills to the new account. Which I will do tonight and some in the morning, which I cannot do online and involve phoning.

    Had some more news from work which is making it look more likely I will be made redundant. But this news just makes me feel happy that I decided to tackle my debt problem now.
    Hoping to be debt free for life!
  • National Debtline
    Hi Ebonydeluxe


    Just an additional observation that I don't think has been made so far, having scrolled through the previous replies.


    For the vehicle on which you wish to exercise your right to voluntary termination (VT), strictly speaking it will not matter whether you actually do that prior to going bankrupt. Any shortfall still owed to the car finance company will be a provable debt in your bankruptcy, whether its size has been established beforehand or not. Of course if you stop the payments and VT it right now, this is all academic anyway but I thought it was worth underlining.


    Dennis
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • Ebonydeluxe
    • By Ebonydeluxe 16th Nov 17, 10:15 AM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    Thank you for clarifying Dennis. I did worry that if I did not get the final bill (difference between outstanding finance and what the car is auctioned off for) from the finance company before entering bankruptcy it could not be added to the bankruptcy and I would be left with further payments to the finance company. But if it doesn’t matter either way then it will not be too stressful if it is I who voluntarily terminate or have it enforced upon me.

    Thank you all for your replies. My only issue now is that I can’t stop this months wage going into my old bank account which means I can’t send them the letter I hoped to regarding not being able to make payments until I have transferred my pay to the new bank account. If I don’t do this I will not have the funds to pay for the bankruptcy. Main problem being that the overdraft fees are going to heavily dent my wage when it goes in. They keep making the charges daily even though I am over my overdraft. By pay day I will be about £60 of outstanding charges. Just have to take the hit.
    Last edited by Ebonydeluxe; 16-11-2017 at 11:14 AM.
    Hoping to be debt free for life!
  • National Debtline
    Hi again Ebonydeluxe


    You may have asked about this already, but it might be worth asking the bank to waive the latest scheduled charges, given that their debt is going to end up in the bankruptcy anyway. Long shot perhaps, but if you don't ask...


    Dennis
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • Ebonydeluxe
    • By Ebonydeluxe 17th Nov 17, 2:46 PM
    • 92 Posts
    • 76 Thanks
    Ebonydeluxe
    Good advice, but I am worried that if I give them the heads up they will hold my salary onces it gets in there and i will not have access to this money.
    Hoping to be debt free for life!
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