DRO and car on finance from carcraft

escortg3

I am trying to help or understand a friends situation. She broke down in work today about her financial situation.

Basically she says she owes 14,500.

She says about 2,000 is a credit card and a cataologue 500 and electricity and gas about 250 the rest 11,750 is car finance with carcraft.

The car is worth about 2000 yep i was amazed that she had this amount of a loan on it but apparently she had a the last two cars through same company and never really paid any of the loans off. Just kept topping it up to change cars.

Anyhow i was trying to find out about a DRO as her debt is under 15,000. She only works part time and has no disposable income at all.

Can i ask what would happen with the car if she was allowed to do a DRO. She doesnt need the car, cant afford the car.

Can the car finance be included in a DRO

Any help would be appreciated. Thanks in advance

coinxoperated

I believe she will need to return the car to them, let them add any fees on they want for it all, and then apply for the DRO. the issue is, they may charge over £500 in fees - which would then kick her out of being applicable for a DRO. She needs to contact CCCS or CAB.

debt_doctor

Hi,
Yes I wouldnt have any problem with that - once the car is sold then the £2k will come off what she owes to the HP company so even if they add some charges, it wont amount to £2k.

DD

fatbelly

You need to check that the 'finance agreement' IS Hire Purchase (or conditional sale) not just a loan.

If it is HP, see this factsheet

Factsheet | Hire Purchase debt

escortg3

Thankyou for your replies.

With the car loan she thinks its not HP. I dont really know. I just would like to get some imformation together for her to make an informed decision regarding her debts.

Its hard to see someone feeling trapped in a hole with no money to feed themselves.

Could she ask them to fetch the car back or would she have to take it back to them.

So i take it once the car has gone back what period of time would we be talking about for them to issue a final bill to her of monies owing please.

fatbelly

If it's not HP/CS, then the car's hers to do what she wants with (and a 2k car disqualifies her from a DRO). If it's just a loan, the lender will probably keep her updated with what the balance owing is!

She needs to look at the original agreement, really.

escortg3

So just to clarify, if the car is not HP and is hers to do with as she wishes, can she sell the car, Use the amount £2000 to settle some debts and still be able to do a DRO

Thanks in advance

fatbelly

escortg3 wrote: »

So just to clarify, if the car is not HP and is hers to do with as she wishes, can she sell the car, Use the amount £2000 to settle some debts and still be able to do a DRO

Thanks in advance

If she 'settles some debts' ahead of a DRO, she should split the sum pro-rata across all those she owes money to. One of the questions on the DRO application is 'have you treated any creditor preferentially in the past two years?'

The car might be worth less than you think and not be a barrier anyway. If you want to pm me the registration number I'll tell you what the likely valuation is - alternatively just check out Parker's Guide.