Fixed loan with 'Creation' via Car Craft

Gaz83

staceyrach wrote: »

Thanks agains for your responses.

What are the implications of going backrupt though....?

Pretty much impossible to receive any credit for a few years, would probably be accepted for a basic bank account only, any sellable assets sold to raise funds for creditors.

However, if she's elderly and lives in social housing, none of that might be too much of a hassle for her. She won't lose her home, that's the main thing.

There are a few steps between defaulting and going bankrupt, though.

Tixy

After selling the car its possible she may be eligible for a DRO (which is like a mini form of bankruptcy for people with low surplus income and low debts)

I would recommend she gets some advice from one of the debt advice charities. IMPORTANT - Where to seek professional impartial advice about your debts.
They should be able to advise on the car loan agreement as well and if and when she can sell the car.

staceyrach

Thanks for that Gaz83, she's in her early 50's and lives in a council property, everything in the property is hers though. So i guess they would take everything and leave her with nothing, no furniture, tv, anything?

I assume that would mean her credit card debt is wiped too?

Does it affect her employment prospects?

If she was to get a job, would they then take any remaining income after her bills are paid?

What actually happens between default and bankruptcy?

I'm trying to figure out what the less stressful option would be, the outcome is going to suck anyway by the sounds of it. The best result would be for their loan agreement to have an anomily but whats the liklihood of that. What if the copy they send doesn't have a signature?

staceyrach

Thanks Tixy, we'll look into that also....

Tixy

staceyrach wrote: »

So i guess they would take everything and leave her with nothing, no furniture, tv, anything?

Not at all no. If she is even vaguely considering the idea of bankrupty she needs to get some proper advice herself from a specialist advisor.

staceyrach wrote: »

The best result would be for their loan agreement to have an anomily but whats the liklihood of that. What if the copy they send doesn't have a signature?

Highly unlikely to have any anomalies given when it was taken out.

staceyrach

Tixy wrote: »

Not at all no. If she is even vaguely considering the idea of bankrupty she needs to get some proper advice herself from a specialist advisor.



Highly unlikely to have any anomalies given when it was taken out.

To be honest the DRO looks like the best approach, sounds really promising. I'm going to have a thorough read of it now though, it's just the ownership of the car that i think will pose a problem.

Thanks sooo much for your help everyone!!! x

National_Debtline

Hello there.

Given the information posted on the thread, I believe that there are three likely options here.

1) Negotiate reduced, affordable monthly payments towards the loan and keep the car. The offer of payment would be based upon a realistic and affordable amount. if your Auntie is in receipt of a low income, this offer of payment *could* be as low as £1 a month. The offer would need to be supported by a comprehensive budget sheet. Your Auntie could have a go at completing one HERE

2) Petition to become bankrupt. If this was to happen it is very likely that the car would have to be sold. Any proceeds would generally have to be paid into the bankruptcy. If your Auntie decides to sell the car in advance, the proceeds should be divided up amongst her creditors.

3) Apply for a Debt Relief Order, this would be possible if her total debt was below £15,000 once the car has been sold and the sale proceeds have been distributed amongst the creditors.

You can find out more about insolvency-based options HERE.

Best wishes,

David @ NDL.

staceyrach

i'm rubbish on this forum, i quoted instead of just posting a reply... oops!!

staceyrach

Thanks a lot David.

If she was able to go with option no. 1, would they then increase the level of interest on the finance or would the amount just stay the same? What i'm trying to say is, would she just end up paying it for the rest of her life. What if she agrees to pay £1 a week but then she becomes employed, would she have to then get back in touch with the creditors and renegotiate the terms and payments?

If she was eligible for option 3, how long would this affect her credit for? Although she's never really borrow masses of money (before this) obviously if her washing machine was to break or something else she would probably have to use her credit card to replace it but i guess that option would not be available anymore so I'm just wondering how long it would be until she would be able to apply for one again?

National_Debtline

Hello again Stacey.

We would hope that a creditor would agree to freeze the interest and any charges so that the debt doesn't increase. There are sample letters on our website which have been desigend to encourage creditors to try and help. You make a good point, and we often see situations where our callers could end up paying their debts for the rest of their lives - and it's situations like this where a formal insolvency-based option *may* be in their better interests.

Most marks will affect someone's credit file for six years, and a DRO is no exception. Rather than use credit to buy items such as washing machines we would generally try and encourage our callers to start setting aside a reasonable amount of money each month to cover emergencies and eventualities. That said, under a DRO and bankruptcy a person is allowed to take out further credit up to the value of £500 - although the rates of interest that would be offered would probably be incredibly high. Once someone is discharged from bankruptcy, or if the DRO has completed, they could borrow as much as they needed.

Hope this helps!

David.