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Car on finance and DRO’s

7 months ago - Posted by

I need to do a DRO but need to keep my finance car which only has about 16 months left to pay on it as I need it for work. The car is worth just over £1000 when put into Webuyanycar, however as it is a finance car surely it’s technically considered to be owned by the finance company rather than myself until the payments are completed? It would be illegal for me to sell it on after all? I’m not sure where I stand with this but one of the criteria for the DRO is that you don’t own a vehicle worth more than £1000, technically I don’t, the finance company does, how does this work? Is there any way around this or do I have to send the car back?

1 Answer

TAD Member

7 months ago

An Approved Intermediary would refer to the Insolvency Service Guidance when helping you put together an application for a Debt Relief Order DRO). As the vehicle is worth more than £1000, and you do not indicate any arrears, they would only have a couple of ways this could be dealt with. One way is to add the liability for the rest of Hire Purchase (HP) to your other debts. This would mean that you were unable to maintain payments to the HP during the DRO and at the end of the DRO you will no longer have liability for the debt so cannot be asked to pay. This would mean that the creditor would have to seek recovery of their vehicle as they would never be able to get paid for it. Another method is to exclude the HP liability from the DRO application. It would not be a debt included in the DRO but the vehicle payments would not be allowed in your expenses because the vehicle is worth over £1000. Also leading to difficulties with keeping the vehicle. If you contact your local Citizen’s Advice and go through with an Approved Intermediary they may be able to see when a DRO becomes a possibility, which may only be when the car is worth less than £1000.

This question was answered by Debt Advice Foundation, an independent UK debt advice charity. If you need further help, Debt Advice Foundation provides a free, confidential helpline and can advise you. Click here to find out more.

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