HP goods and the increasingly strange rules within DROs

debt_doctor

Hi all,

Just thought I would post an update from the latest version of Intermediary guidance issued by the Insolvency Service regarding HP goods (cars, furniture and other goods)...............

If a HP agreement is in ARREARS it MUST be included within the DRO and the debtor would not be able to pay, putting the goods at risk of seizure. Someone else (not the debtor) could take over the payments to protect the goods if the hirer accepts this.

If a HP agreement is up to date, the debtor can CHOOSE to include the debt or not. If the choice is not to include, then the debt does NOT count towards the £15k debt limit. Further, the payments are an allowable expense providing that the goods concerned are for the debtors or their families reasonable domestic needs.
The intermediary is to determine whether such goods constitute reasonable domestic needs - I know, personally, I shall use the BR comparison of domestic goods kept in bankruptcy - ie all goods are reasonable needs unless of excessive value (an immediate resale value of £300 for DRO purposes.

In the case of a car (this is where it gets even more strange) if the vehicles actual resale value exceeds £1000 then the payments would not be an allowable expense, but someone else could make the payments. A HP car can never be considered an asset for DRO purposes as it does not belong to the debtor.

As the IS themselves say in the guidance, this allows for some 'manipulation' on the part of the debtor, but the new guidance has been issued on the advice of the IS legal advice team.

I am pleased for the clients, their interests are my number one priority, but I do find the whole situation surprisingly lenient.

DD