Section 3 of SOA

jo70

Yes us again and people have helped us tonight but cos we're thick still don't understand.

Do we have to list the car-on HP in section 3 as an asset as it asks in that (3) section on form motor vehicle (14).

We have listed the car as an asset in 3.7 but we aren't clear about the first section as we are being told differing things by different people including a friend of ours-a fellow bankrupt who filled out his own forms and has said that our counsellor is wrong about section 3 that the car is not OUR asset

Thanks from the dummies A & J

fermi

I would say that a car on finance is a "potential" asset, and as such it should be included in section 3.1.

It would then be up to the OR to come to a conclusion regarding that, although it is probably a forgone conclusion in most cases.

So if it was me I would include it in section 3.1, but make a note that it is subject to outstanding finance.

fermi

Just looking at the OR's guidance, and I think they would see it as an "asset subject to credit".

vi) Vehicles subject to finance agreements

Generally, where a vehicle is the subject of a finance agreement, the official receiver must consider the type and terms of the finance agreement before deciding on the course of action to take. For further information see Case Help Manual part: Assets Subject to Credit

The terms of any hire purchase, conditional sale or leasing agreement usually gives to the other party to the agreement (referred to hereafter as the hiring owner) the right to terminate the agreement in specified circumstances. These circumstances will usually include the making of a bankruptcy or winding –up order and will generally allow the hiring owner to take back the vehicle.

Where a vehicle is subject to a finance agreement, the official receiver should contact the hiring owner. This contact should be by telephone in the first instance, followed up in writing. The official receiver needs to know the nature of the agreement, the amount outstanding under the agreement and the settlement figure required to conclude the agreement and obtain ownership.

From the value of the vehicle in question, the official receiver can then decide whether there would be any benefit to the estate in realising the vehicle. If there is no equity, the official receiver should inform the hiring owner that he/she does not intend to deal with it and that arrangements should be made to collect it as soon as possible.

Where the value of the vehicle is sufficient to allow for a surplus after settlement of any debt to the hiring owner and payment of the agent’s costs of sale, the official receiver should approach the hiring owner for his consent to a sale by the official receiver. Where the likely equity from such a sale is borderline, the official receiver can come to an agreement that the hiring owner dispose of the vehicle and hold any surplus to the official receiver’s order.

Such decisions should only be made by the examiner and any relevant correspondence should be passed to them for consideration as soon as it is received.