Car debt and reposession

debt_doctor

Generally speaking under a controlled credit agreement ( hp ) if someone has paid less than one third of the payments the finance co can take the car back, in default without a court order, the borrower would then be responsible for the shortfall debt.

If half the payments have been made then you can hand the car back and 'walk away' from the deal with nothing else to pay.

To sell the vehicle without the express written permission of the lender is a CRIMINAL OFFENCE.

It would seem that whatever happens your son will end up with an unsecured short fall debt, and the usual remedies will apply, ie; reduced payments, token offers or bankruptcy.

Best wishes

Dr_Hook

I'd take a very close look at the credit agreement - black horse have a habit of insisting that unsecured loans are hire purchase agreements.

The agreement should clearly state that it is hire purchase, have termination and repossession clauses and should say in the small print that ownership of the goods is retained by the lender until the balance is repaid. If the agreement contains none of these things it is unsecured, despite how much black horse may try to bluff to the contrary. If that is the case, the car is your son's to sell or do with as he pleases. It also means that he can offer lower repayments if he is struggling and black horse have no more power to seize the car than a credit card company would.

If in doubt, take it along to your local CAB office and have a specialist check it out.

LJW_2

Hi thanks for all your advice it is very usefull.

With regards to selling the car I have spoken with BH and they have stated that we could sell it so long as the money is paid to BH on that day! I also thought is was illegal for us to sell as it isn't our property!

Thanks again

Dr_Hook

Sounds like it's unsecured to me - I doubt Black Horse would have let you sell it otherwise.

Glad you got it sorted.

thebaroness

Hi,If your son really can't afford the repayments then perhaps selling the car is your best option. You are entitled to do this if it is a Hire Purchase agreement but as you have been advised by Blackhorse you would need to make sure the finance is settled off first. I would advise your son to obtain a settlement figure and also an offer from a dealership. If the money from the part exchange is not enough to cover the finance then your son will have to cover the shortfall himself, perhaps by obtaining a loan for a lower amount. Once your son has paid the shortfall, the dealer who is buying the car would then pay blackhorse the remaining amount. The car would then be removed from hpi and become his property. I hope that helps.

TheAble

Is the debt secured only on the car and nothing else? If this is the case I would suggest he doesn't make any repayments, that way they'll repossess the car but they can't take anything else. If he didn't put down a deposit then he won't be out any money.

Yes it will put a black mark on his credit record, but better than paying £200 a month for 5 years. When the 5 years are up the car will only be worth around £1500 so he'd be out £10,500 (£8000 + £4000 interest).

rog2

TheAble wrote: »

Is the debt secured only on the car and nothing else? If this is the case I would suggest he doesn't make any repayments, that way they'll repossess the car but they can't take anything else. If he didn't put down a deposit then he won't be out any money.

I would advise thinking very carefully before choosing this option, TA. From my own experience, Black Horse will repossess the car, put it to auction, where it will sell at a 'fraction' of its value. They will, then, vigorously chase the OP for the 'shortfall' - so he could be SERIOUSLY out of pocket.

thebaroness

I have to second what Rog2 has said. Allowing it to get to a point where they would repossess the car is avery bad idea and your son will still owe them money. If you sell if yourself you will get much more for it then Blackhorse will at auction.

LJW_2

Hi, thanks again for all your advice. Still not sure what option to take but selling the car is the best option and cheapest. I have spoken with BH and asked how he would pay back any debt to them. They told me that they would contact my son and ask for his earnings and his monthly outgoings. I replied that if they had done this in the first place then he wouldn't be in this situation!!!!!!!

tupperware

Probably a bit late now but as you have been advised the most important thing is if this is a Hire Purchase agreement or a Personal Loan agreement.

It will say clearly at the top of your son's agreement.

If it is a hire purchase agreement then you can request a Voluntary Termination which means the car is taken, sold at auction and your son is given a liability figure that he is responsible for.

If it is a personal loan you can either request a Voluntary Surrender or sell it privately. 10 times out of 10 you will get more selling it privately.

Personally judging by the request to carry out an income/expenditure I get the feeling it will be a personal loan as BH will be trying to feel out how much your son can reasonably afford to pay each month. If it was a hire purchase they would demand the full contractual installments and if they weren't met your son would recieve two notices of default before the vehicle was repossessed. They may offer reduced payments for a period of time (usually 3 months) but this is pretty much a waste of time if you know your son can't afford the vehicle.

My personal advise is voluntary terminate if HP or sell privately if Personal Loan. Then you will be able to negotiate affordable payments for the liability.