After my first post last week, I finally plucked up the courage to contact a few IPs - Im currently waiting to speak to another (scheduled for tomorrow) so that I can then decide how I will be moving forwards. However, in my initial post last week I did mention that my old car is costing me a fortune and posed the question as to whether I would need to limp through an IVA (if successful in putting a proposal forward) with my old car or if I would be allowed to purchase a new car on HP. The advice seemed to be that I should purchase a car now but ensure it was on HP. Id trawled websites and found a good deal in a local garage where I was accepted for finance on a decent rate with a payment of £100 per month over 5 years. However, having spoken to an IP yesterday, I was told that if my proposal for an IVA was successful the new HP company would be notified of this and they would automatically take the car back and that this is standard practice for anyone having entered a new HP agreement within three months of applying/commencing an IVA. Is this correct? The last thing I want to do is end up with no car at all as I need to get to work and back each day. Any advice/information would be appreciated.
I do appreciate that it seems terribly wrong to be seen to be taking on more debt when I cant pay what I already have but Im concerned that if my IVA proposal is accepted then I will not have any spare funds to keep my car on the road and figure that if Im able to secure a reliable vehicle now then at least continuing to work is guaranteed.
Hi
I don't think that this advice is correct.
In every HP agreement will be a clause allowing the finance company to take back the vehicle if you enter into an IVA or bankruptcy.However if your payments are met and you have the allownace in your expenditure agreed by your creditors the finance company will seldom act on this clause
Will be interesting to hear Melanies and Michaels view on this
Regards
I agree with Andy although there have been cases that have caused a problem when the HP company was a small obscure company. If you used one of the main HP providers such as Black Horse, GE Capital etc they are happy to collect the money and just want to see that the HP payment is listed as an outgoing on the income and expenditure account.
The deal offered is with Black Horse. Unfortunately, they were one of my creditors. I thought I owed them about £500 but when I called to ask for a settlement figure is was £250 so Im proposing that I repay this in full with money 'saved' from not making any further payments to creditors (as advised by IPs I have spoken to to date). Is this idea satisfactory or am I really sinking low in my sorry attempts to sort myself out and will Black Horse therefore snatch the car back if I am successfull with an IVA?
Hi
I think that it is sensible to have a decent car for the five year period as in the long run it is more cost effective.
Take advice from your IP regarding the outstanding BH debt
Regards
There is nothing wrong with what you are proposing to do but ensure that the agreement is definitely hire purchase otherwise Black Horse would have to be included as an unsecured creditor and this could cause problems.
I did request a copy of the loan details 'up front' from the dealer and he provided me with a pre-contract agreement that sets out all costs. This specifically states is a Hire-Purchase Agreement Regulated by the Consumer Credit Act 1974 and refers to Termination: Your Rights, Repossession: Yours Rights etc.
I will wait until Ive spoken to another IP tomorrow and ask their advice before I sign on the dotted line for the car but it seems just when you think you are moving forward in dealing with your problems, there is something else to worry about that makes you want to go back into hiding!
I think you have done everything right and the agreement is hire purchase. £100 per month is minimal for HP and hopefully you can nowe move on and have your IVA drafted and accepted.
I have never seen a HP company ask for a car to be returned so long as payments are maintained, and I don't think you should pay the £250 to Black Horse - thus providing them with a full repayment, as other creditors will not be so fortunate. If you have already been accepted for the finance, I cannot see that this would be a problem.
I had an a H.P. agreement with Black Horse when I entered into my IVA, I was about 24 months into the H.P. with 16 months to go.
My IVA was accepted with Black Horse listed as a secured creditor and my IVA incorporated the payments to Black Horse and was to continue till the end of the H.P. agreement.
About 1 month later I received a letter from B.H. stating that because I had entered into an IVA, I had broken the T&Cs of the H.P. agreement and that I should pay the remaining amount in full or they will repossess the car.
My parents agreed to pay the car off for me so when I phoned Black Horse they said that if I was to continue with the payments there would be no problem, I declined their offer and paid off the H.P.agreement.
It looks like I had received a 'standard letter' from B.H. but the threat was still there so you may also receive such a letter.
Hello SG70 I had a new car on hp with a balloon payment payable in the third year and all was perfectly fine!! they refinaced the balloon as well (Renault Finance). Just be sure your using the right IP and be sure the person your speaking with is not just a call centre operator. If I had my time again I would use a lady on here called Melanie she has given me loads of advice often when my IP was shut and I had gone into panic mode!! I am actually very pleased with my IP company who were Freeman Jones they were brill but never the less Melanie has been a fantastic support along with all the other memebers on here. Dont panic about making a choice with IP's once you've got with one it is near impossible to change and you have to stick with them for 5 6 or even 7 years!! Dont be put under pressure and once you have shorlisted ask on here who has used X company xx good luck I'd go and sort your car out because once the iva is approved thats it NO CREDIT what seems like forever and ever !!!! Best wishes Karen
Last edited by kabby3 on Wed Feb 17, 2010 8:57 am, edited 1 time in total.
On the slow safe road to success. Personal thanks to Melanie Giles Kallis Skippy Elv5 and all the other wonderful forum friends.
As you rightly stated if you are proposing an IVA to your existing unsecured creditors it will not be looked upon kindly if they see that you have recently obtained credit to purchase a new car (as details of any assets will be stated in the IVA Proposal).
Creditors will however take in to account that you need a car to get to and from work and will usually allow you to purchase a car to the value of approximately £2,000. Where the value of your currently car is higher than this you will be usually be expected to trade it in and pay any surplus into the IVA.
Unless you have any exceptional circumstances which may require you to have a higher value car (e.g. require a modified car due to disability, your job requires your car to meet specific standards such a Taxi Driver etc), then above information is pretty standard in IVA cases.
If you do enter into an IVA all of your secured creditors will be notified of this and I would recommended that you read through your secured agreements to see where you stand with regards to the repossession of goods as this will differ from creditor to creditor.
Bridgewood specialise in helping people deal with their debts and make the most of their financial situation - providing free, no obligation debt advice.
We can also setup a complete range of solutions including debt management plans, IVA and bankruptcy support.
Hi
Not sure if I agree that cars over 2k are required to be traded in and funds paid over. This may be true in bankruptcy but I have personally had many IVAs agreed where the clients car value is far higher than 2k.
Will be interested to read Melanies/Michaels view on this
Regards
Even in bankruptcy the £2k figure does not seem to be consistent and I have often found clients keeping vehicles worth up to £4k.
In an IVA I routinely exclude vehicles worth amounts greater than £4k and rarely do creditors look for downsizing. I do agree however, that a high value vehicle bought just before the IVA is at risk particularly if the agreement was not hire purchase but that would the exception rather than the rule.
It is often pointless to make someone downsize as cheaper cars require more servicing and are less fuel efficient meaning the savings are rapidly eroded. There is also the danger of older vehicles packing up altogether which would necessitate a variation and reduction in monthly contributions. These risks are less in bankruptcy since the client is normally discharged after 12 months whereas an IVA usually lasts five or six years.
