| |
| |
|
Credit Information |
|
|
|
How to Deal with Hire Purchase Debt
WHAT IS HIRE PURCHASE/CONDITIONAL SALE? Although people often talk about "buying on HP", Hire Purchase Agreements are quite unusual these days. Cars are the most usual goods sold under Hire Purchase or Conditional Sale Agreements. With Hire Purchase and Conditional Sale Agreements, you do not own the goods until you have paid the credit agreement off. This means they are not the same as ordinary credit agreements. This means you cannot sell the goods yourself without the creditor's written permission. If you sell the goods without permission, it can be a criminal offense. On ordinary credit agreements, the goods you buy belong to you from the time you take out the credit. The lender cannot take the goods back. They can only ask you to pay the money you owe under the agreement. WHAT IF I CANNOT AFFORD TO PAY? If you fall behind with your payments on a Hire Purchase or Conditional Sale Agreement, the creditor may be able to repossess the goods. Look at your agreement. There will be a box telling you how much you need to have paid to stop the creditor taking the goods back without a court order. This should be a third of the total amount payable under the agreement. If you have paid a third or more of the total owing, the creditor must go to court to ask for the goods back. They cannot just come round and remove them. Even if you have not paid more than a third of the agreement, the creditor will need an order from the court to remove the goods from "any premises" they are on. This appears to include your garage or drive but not a car park or roadside. If your car is parked on the road, or in a public car park, then it would be at risk. WHAT IS THE PROCEDURE IF THE CREDITOR HAS TO GO TO COURT BEFORE THEY CAN GET THE GOODS BACK? There is still a chance that you can keep hold of the goods, as the court has the power to agree to this as long as you can pay the debt back in reasonable instalments. If you have a third or more of the total payable under the agreement, the creditor will ask the court to send you a Claim Form asking for the goods to be returned. This is called an application for a "Return Order". Notice of a hearing date with a District Judge is included. This hearing should be in your local County Court. There will be form with the Claim that you should fill in and send back to the court within 14 days. You must fill this in if you want the court to suspend the Return of Goods Order and allow you to keep the goods at home. You need to offer to pay the debt back in monthly instalments you can afford. It is important to treat this debt as a priority over ordinary credit debts and offer as much as you can. Send the form back to the court, not the creditor. The court will send a copy of your form to the creditor. If the creditor accepts the offer the hearing will be cancelled. If the creditor does not accept the offer the hearing will go ahead. You must attend the hearing. The court will decide at the hearing whether they will suspend the Return Order and what monthly instalments you should pay from now on. If you do not fill in the admission form there will be a hearing anyway. If you don't go to the hearing the court will probably grant the creditor an order telling you to return the goods. WHAT IF I HAVE PAID LESS THAN A THIRD AND THE CREDITOR WANTS THE GOODS BACK? If you want to keep the goods you should ask the creditor to agree to a payment arrangement with you. The creditor is most likely to accept if you can afford the full monthly instalments plus something towards the arrears. If you can't make the full payments, the creditor may agree to reduce the payments, but usually by a small amount and only for a short time. In certain circumstances you may be able to go to court and ask to pay less than the full monthly instalment and extend the length of the agreement. HOW MUCH WILL I OWE IF THE AGREEMENT ENDS? If you have to decide whether to end a Hire Purchase or Conditional Sale agreement there are two options: * return the goods voluntarily; or * let the creditor end your agreement and repossess the goods. There can be a difference in the amount you end up owing depending upon how the agreement is ended. YOU END THE AGREEMENT You have the right to terminate your agreement under Section 99 of the Consumer Credit Act 1974 If you decide to end the agreement voluntarily and hand back the goods to the creditor, you should only have to pay up to half of the total figure on the original agreement, minus what you have already paid, plus any arrears from missed instalments, and damages to the goods (in certain circumstances). It is very important that you tell your creditor in writing that you are ending your agreement voluntarily. If you do not do this, then your creditor does not have to act on your request. Keep a copy of your letter in case you need proof. We have included a sample letter in Appendi x III, you may want to adapt to send to your creditor when ending the agreement. Warning: If you have a Default Notice sent to you by the creditor because you are behind with the payments on your agreement, this may mean you will have lost the right to end the agreement voluntarily and return the goods yourself. It depends upon your agreement. Your creditor may have called in or "terminated" the agreement when the Default Notice runs out. Some agreements say another notice to terminate the agreement has to be sent to you after the Default Notice has run out. THE CREDITOR ENDS THE AGREEMENT If you fall behind on the agreement, the creditor will terminate the agreement in writing. They must send you a "Default Notice" under the Consumer Credit Act 1974. They will then order you to return the goods. The Default Notice tells you what payments are outstanding and gives you a date by which to make up the arrears. The whole balance may then automatically become payable and the agreement terminated. Some agreements need another notice to be sent to you before the agreement is terminated. You may have to pay the full amount owed on the original agreement, minus what you have paid and minus the amount the creditor gets back from selling the goods. The "option to purchase fee" is also deducted. Most agreements will include a clause telling you that you must take reasonable care of the goods. This means the creditor might argue that there will be an extra charge for damage or unusual wear and tear. It is important to look at any charges to see if they are reasonable. Some creditors try to charge you for collecting the goods after the agreement has been terminated. It appears that this is not allowed under the Consumer Credit Act. If asked to pay an additional charge, you can complain to your Trading Standards Department. Your agreement may say that you have to return the goods to your original supplier or somewhere similar. You should not be asked to return the goods further away than is reasonable on the grounds of cost and distance. WHAT HAPPENS ONCE THE CAR HAS BEEN RETURNED? Once the car has gone back to the creditor, they can try to recover any balance still owed from you. You can treat the debt as an ordinary credit debt and make an offer of payment using the information pack and your personal budget. If the creditor does not accept your offer, they can sue you in the County Court for the balance. If you dispute the balance the creditor says you owe, then it is important to write to the creditor and tell them. This may be because they claim you damaged the goods and you want to dispute this. You may have to put a defence in when they send you the County Court Claim Form. If you put in a defense, there will be a hearing at the County Court where the District Judge will make the decision about how much you owe. They may decide that you owe less than the creditor has claimed. You will then have a County Court Judgment which you can offer to pay in instalments that you can afford. Also the creditor may work out the amount you owe using a different calculation to those shown in Appendix I. The Office of Fair Trading agree with this way of working out the debt owed but creditors often dispute it. APPENDIX 1 EXAMPLE AGREEMENT HOW THE AMOUNT YOU OWE CAN DIFFER: Total price on Hire Purchase Agreement £4,000 Amount you have paid off £1,600 Arrears (unpaid instalments) £200 Damage to goods £250 Value/sale proceeds of goods £900 "Option to Purchase fee" £5 IF YOU END THE AGREEMENT Half the Hire Purchase price £2,000 Amount you have paid off minus £1,600 Equals £400 Damage to goods plus £250 YOU WILL OWE £650 CREDITOR ENDS AGREEMENT Total Hire Purchase price £4,000 Amount you have paid minus £1,600 Sale proceeds minus £900 "Option to purchase fee" minus £5 YOU WILL OWE £1,495 APPENDIX 3 Company's Address Dear Sir/Madam Re: Account Number (Car Make/Model and Registration Number) Voluntary Termination I am/we are writing to notify you that I am/we are exercising my/our right to terminate the above Agreement under Section 99 of the Consumer Credit Act 1974. (Optional - add details of your circumstances and financial situation) I/we understand that I shall/we will be liable to you for the amount calculated under the formula in Section 100 of the Consumer Credit Act 1974. Please send me/us details of how the vehicle can be returned to you. Please confirm receipt of this request by telephone/fax to me/us on (your telephone number or fax number). Yours faithfully Your Name Author
MORE RESOURCES:
Credit - Google News |
|
|
|
RELATED ARTICLES
All Is Fair In Love, War, and, Your Credit Report - At Least It Should Be! Understanding the FCRA Fact: Over 150 million Americans have credit report with the three major credit reporting agencies. Approximately 50 million of these credit reports contain errors, many of which are inaccurate. How To Use Your Credit Cards Wisely Are you one of the thousands pulling your hair out trying to figure out how you're going to pay your credit card bills? Using your credit cards wisely and sensibly will help you avoid financial problems and establish a strong credit rating, so here's some information to help you get your credit card problems under control.Credit cards are convenient for buying things now and paying later. What Does Your Credit Score Tell You? When you apply for a loan or a mortgage, the first thing the lender does is to check your credit score. Based on your credit score, the lender decides the amount of finance you are eligible for and the interest rate at which you will be charged. Why Does Your Credit Card Rate Keep Going Up? Have your read your credit card contract through completely? Do you know when it is okay for your creditor to raise your interest rates? If you are not sure about how and when your rates can be affected over the life of your contract you should take a few minutes to read your contract thoroughly from beginning to end.Creditors must have clauses in their contracts that give them the right to change your interest rates. Make Sure Your Credit Report Is Correct to Improve Your Interest Rates And Lower Insurance Premiums Did you know that you could make sure to get the best rates on your auto and homeowners insurance simply by having a good credit score.Additionally a great credit score will allow you to get the best interest rates on your credit cards, car loans and even your home mortgage. Small Business Credit Cards So what do you look for when applying for a credit card for your small business? One thing is for sure, wasting money isn't an option because it can make or break your business. Things to look for are low interest rates and good customer service. Four Tips How Homeowners Can Rebuild Their Life After a Foreclosure Let's face it, if you are facing the possibilities of losing your home due to a foreclosure and you think that you may never be able to purchase another home anytime soon. Keep reading. Bailiffs & Council Tax - Knowing What To Do This article is about bailiffs who may call trying to collect Council Tax or Community Charge (Poll Tax) arrears. If a bailiff has contacted you to collect another sort of debt the law might be different. 14 Common Credit Mistakes Establishing credit and wisely managing your credit becomes easier when you know how. You'll feel empowered by taking knowledgeable steps towards good credit, and you'll be on your way to purchasing real estate and greater financial freedom. Teaching Students To Keep Out Of Credit Card Debt - The Parents Role Parents have the full responsibility for their children and their education. It is up to parents to teach their children what's right and what's wrong, how to conduct themselves as good citizens, how to cross the road safely and generally protect themselves from harm. Bankruptcy Myths Busted The average American knows very little about bankruptcy. Most people probably are aware of bankruptcy's ability to dissolve debt and give the debtor a fresh start. Commercial Collections: Business Finance Booster Shot Commercial collections: fixture of the new B2B cultureIf you're in the business-to-business field, or even if you're a consumer products business that works through third-party distribution channels, you probably know what it's like to check your mail anxiously each day, sifting through all the bills for that payment that was supposed to have been in months ago.It wasn't supposed to be like this. Credit Card Benefits and Drawbacks Credit cards have both benefits and drawbacks. It is wise to consider both before applying for a credit card. Finding and Applying for the Right Credit Card Offer Online Anywhere you go online nowadays, you will see a multitude of ads for credit cards. Some offer low interest rate for an introductory period, or bonus frequent flyer miles while others offer real discounts on new vehicles and equipment. Building Business Credit Most businesses want to be able to borrow money when they need it, without the owners having to guarantee the loans personally. This means less risk to the owners. Credit Score - Reporting Your Financial Health Credit score is one of the most basic, determining factor while loan borrowing. Credit score is the criterion for the creditor to ascertain whether to give you credit or not. Stop Credit Card Offers You can stop receiving credit card offers in the mail! It's really easy to do - just phone 1-888-567-8688 and follow the prompts and provide the requested information including Social Security number, date of birth, etc.Do this for every adult member of your household, including college students. Shoppers Beware - Tis The Season It's the number one complaint from consumers and it only takes a moment for you to become a victim. While you search for holiday bargains, identity thieves are searching for targets - unsuspecting consumers. How To Survive In A Plastic World, Qualifying For Credit Card Let's face it, having credit is no longer a choice. "Don't leave home without it" is more like "can't buy a home without it. The Truth About Credit What you might not know about credit.Some people don't know about a loop hole in the credit reporting system.
|
| Good Credit Loans | home | site map | School Bus Clothing | Florida Pool Heating |
| © 2006 |
