Bankruptcy with a DLA car

hobbo0408

A family member recently went bankrupt, and recently got accepted for DLA and decided to have a car on mobility. She is awaiting phone call from the O/R on the 31st. But today has recived a letter from the DLA , They are looking into weather she can keep the car or not.

So is there any need for her to worry about them taking the car back ?

debt_doctor

Hi,

Cars provided under the mobility scheme are usually rented cars with the high rate DLA Mobility monies providing the rent. I have never seen any issue with these agreements in BR either with the OR or the mobility scheme.
However there is a less well known scheme where the arrangement is a hire purchase scheme so the disabled person ultimately ends up owning the car. I have never dealt with this scheme in BR but can see it causing all sorts of problems in BR.
Having said that, in theory, I cant see any reason why the latter scheme couldn't terminate in BR and a take up made of the rental scheme - but I'll cross that bridge when I come to it!

DD

mysterio_2

never an issue with brothers dla car(philnicandamy)
...he changed day after his bankruptcy and has again since (hes 6yr +) and hes on a 3yr lease

all motability said was they needed word of bankrputcy in writing to them..

hobbo0408

Would that come under essential outgoings ie, £200 a month used from the higher DLA allowance or could they say that could go towards paying back creditors.

debt_doctor

This is from the IS technical manual;

31.2.33 Motability scheme agreements
The Motability Scheme enables disabled people to lease a car, powered wheelchair or scooter by using their government-funded mobility allowances. An individual is able to exchange his/her allowance for a mobility package. Payments to Motability are made directly by the Department for Work and Pensions. The right to receive these benefits is personal to the individual. As the official receiver is not capable of fulfilling the eligibility criteria it is considered that this renders the contract with Motability personal to the bankrupt and therefore not capable of vesting.
As neither the vehicle nor the lease contract with Motability forms part of the bankruptcy estate the official receiver has no interest in the vehicle.

31.2.34 Lease agreement with an option to purchase
At the end of a leasing period (see paragraph 31.2.32), the vehicle will generally be returned to the leasing company, but there may be a clause in the agreement that gives the lessee the right to purchase the vehicle (sometimes at a pre-agreed price). Subject to any express term in the agreement that right will pass to the official receiver as liquidator or trustee.
In deciding whether to take advantage of this right, the official receiver should consider the value of the vehicle (see paragraph 31.2.44) against the price being asked by the leasing company. In the likely event that the vehicle is worth less than the amount being asked for, the official receiver should follow the advice in paragraph 31.2.30 regarding the non-adoption of the agreement.

Therefore in the standard lease scheme (most are this scheme) the OR cannot interfere with the choice made by the disabled person as to what they use the DLA mobility monies for, so the monies would not feature in any income / expenditure calculation.

The second paragraph relates to the less popular lease to buy scheme.

DD