I have a car on hp, with all payments up to date. Its in negative equity – worth approx £8000 with outstanding loan of £10,000. I have two years left on the deal, then I can either return the car to the dealer or pay a balloon payment of £5000. Monthly payments are £231, which I was told were too high for the OR to let me keep the vehicle. However its absolutely essential for work – I deliver pizzas – and without it I couldn’t work. Can the OR make an exception and allow me to keep the vehicle? I have no cash to buy a cheap run about.
Once the bankruptcy order is made the decision as to whether you will lose the vehicle will be made by the finance company and the Official Receiver. You will need to check your ‘hp’ agreement, it will state what will happen in bankruptcy. Some finance companies demand the return of the vehicle, others allow you to keep it, as long as you maintain the payments. The Official Receiver will need to agree as to the amount of the payments.
As you are self employed and the vehicle is in use for work your chances of retaining it are enhanced since you can argue that it is a ‘tool of the ‘trade’ and that return of the vehicle would only mean an increase to the level of debt to be included in the bankruptcy and you would have no income from which to make a contribution towards your debts until you found new employment.
This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you’re looking for an alternative to Bankruptcy, Debt Advice Foundation provides a free, confidential helpline and can advise you of all your options. Click here to find out more.
There are exceptions to the rules that the OR enforces. You should explain your position to the OR who will look at your options and see if there is an alternative or whether you should be allowed to keep your car. The OR can negotiate with the HP company and change the terms of your agreement. However, the finance company may come and repossess the car if you have defaulted on payments.