Potential Bankruptcy - Query

darloboy_2

Hi All

Writing on behalf of a friend of mine, who does not have internet access.

She entered into a DMP about 2 years ago (unfortunately not via CCCS or Payplan, with a rip-off fee company). Anyway she has been a bit stupid and taken out a secured loan on her car with Logbook loans who - after i've done a bit of reading - do not seem like the most decent people in the world.

Anyway she has not paid her DMP for 3 months as the situation with Logbook loans has worsened (original payments of £130 per month are now about £240), and she cannot afford to make her payment this month to them.

They have now threatened to take her car and charge her a fee of £500 this week, which is her own fault as she should have researched before she went into it. However I can critiscise her all I like, but it's not going to help her in her current predicament.

Although they should have possession of her logbook, she still has it as she required it to get car tax and they never asked for it back. I (and she) wondered what the implications were, if she disposed of her car (value circa £2.5k), bought herself a runaround for about £1k, paid some back to Logbook loans and kept some aside for fees towards a bankrupcy.

We were not sure what the implications of taking out a loan (secured or otherwise) were whilst in a DMP, whether this would be frowned upon in a bankruptcy hearing, or whether it was actually legal to do this whilst in a DMP.

I know technically it is supposed to be a secured loan, however the legality of a Logbook loan in terms of their ownership of your car is, I believe, a rather grey area.

If she disposed of her car, and took the bankruptcy option, would Logbook loans then just form part of her creditors in a bankrputcy proceeding?

Sorry if this post seems a little long, and I hope it is not jumbled, but any advice anybody can give would be greatly appreciated.

Cheers
Craig

tigerfeet2006

The debt would become part of her bankruptcy estate. Is a car nesceray to her every day life. She will have to show that it is to the OR. If she sells the car she musn't give any of the money to Log book loans this would be preferential treatment.

The first thing she must do is ring National Debtline/ CCCS or the CAB and talk to them. They will take her through all her options. If they suggest BR then we can help and support her through this.

So_Sad_Angel

Hi Craig,

Your friend must be going through so much worry...I feel for her but she is lucky to have a friend like you to help her.

She must call one of the debt charities asap...I think TF has beaten me to it with the numbers but your friend needs to know her rights before action is taken. If she prefers then CAB can offer advice on finance agreements as well as DMP/BR options. Don`t let it drag on as this company will keep loading on the penalties.

Let us know how she goes on. She must be so worried...give her our <<hugs>>

Angelxxx

JCS1

I understand that Log Book Loans secure the loan against the vehicle via a deed of sale (their interest rate is also extorinite (sp?) over 340%).

As the loan is secured on the vehicle, I am not sure if she can legally sell the vehicle without logbook loans consent. If she keeps paying them, it would not be a preference, as like a mortgage, it could be considered a secured debt, though like you said whether it's secured or not is a grey area.

Please urge her to take advice, Log Book Loans are will known to the OR, and I am sure CAB/CCCS/National Debt Helpline will have had dealings with them in the past too.

tigerfeet2006

Thank you for that information JCS. I must confess I have only heard of them as a by the by. At least the OR knows what they are and has dealing with them.

This needs definatly a call to the debt charities.

maxmycardagain

every british car auction site has multiple entries from logbook loans, they only advance about 1/3rd the value of a vehicle so they make that back even thru auctions.

d72

Just wanted to let people know that, according to other sites regardling Logbook Loans, the OFT are investigating them. May be an idea to contact them with any horror stories.