Bankruptcy

[xLulzx]

If you goes Bankrupt do they take things that's on Hire Purchase to sell off to pay the Debts ?

 

[simon field]

If you goes Bankrupt do they take things that's on Hire Purchase to sell off to pay the Debts ?

Nope, that stuff doesn't belong to you

 

[OldWelshGuy]

But it is unlikely you will be allowed to keep those things as the HP agreements would form part of your bankruptcy

 

[Paul_Rosser]

Depending on the terms of your HP lease the company who provided the goods may also become a creditor if you owe them money due to early termination of the agreement.

 

[OldWelshGuy]

Also if it is a vehicle you might be allowed to keep it if you need it to work, and it is not of a high value. (I think the amount is around £1500 in value. (don't quote me on that though)

 

[Lease4Less]

Also if it is a vehicle you might be allowed to keep it if you need it to work, and it is not of a high value. (I think the amount is around £1500 in value. (don't quote me on that though)

Highly unlikely if the vehicle is on HP. The finance company wouldn't care less if you needed if for work and would want the asset back ASAP.

 

[Alan R Price]

If you goes Bankrupt do they take things that's on Hire Purchase to sell off to pay the Debts ?

If there is any "equity" in the agreement (i.e. there would be surplus funds after selling the assets and paying off the hp debt) the trustee would probably want to sell it. If it is a car that you need personally for your job or business you might be able to keep it as an exempt asset. OWG mentioned a value £1,500 and that is a good "rule of thumb". If there is less than £1,500 equity it is unlikely the trustee would be interested.

If there is no equity in the agreement, the trustee will disclaim it. It will then be for you to negotiate with the hp company if you want to keep it. My experience is that as long as there is somebody willing to take on responsibility for making the payments, the hp company would rather have a functioning agreement than repossess the asset and sell it at a loss. However going bankrupt will almost certainly give the hp company the automatic right to repossess and they sometimes do.

 

[Spongebob]

If there is any "equity" in the agreement (i.e. there would be surplus funds after selling the assets and paying off the hp debt) the trustee would probably want to sell it. If it is a car that you need personally for your job or business you might be able to keep it as an exempt asset. OWG mentioned a value £1,500 and that is a good "rule of thumb". If there is less than £1,500 equity it is unlikely the trustee would be interested.

If there is no equity in the agreement, the trustee will disclaim it. It will then be for you to negotiate with the hp company if you want to keep it. My experience is that as long as there is somebody willing to take on responsibility for making the payments, the hp company would rather have a functioning agreement than repossess the asset and sell it at a loss. However going bankrupt will almost certainly give the hp company the automatic right to repossess and they sometimes do.

I'm puzzled, Alan.

Under a hire-purchase contract the car belongs to the finance company until the end of the HP period.

http://www.financingyourcar.org.uk/hire-purchase/

During the period of the agreement the user of the car is simply hiring it - he does not take ownership of any part of the car until the final payment is made.

How then, can there be any 'equity' in the agreement part-way through? To me it appears cut and dried - a car on HP is not an asset and should not be considered one by a trustee in bankruptcy.

Please explain...

 

[Lease4Less]

Although you are correct Spongebob in that the vehicle remains the property of the finance company until the end of the HP agreement the vehicle is an asset to the end user.

On a HP agreement as long as the customer has paid at least one third of the total amount payable (this includes any balloon payments) then the finance company would need a court order.

In all cases, unless the customer has payed at least one third of the total amount payable the finance company would look to reclaim the vehicle if the customer enters an IVA or goes bankrupt.

 

[OldWelshGuy]

I am not sure they need a court order if bankruptcy comes into things, as there is normally a clause in the agreement covering this ,

 

[Alan R Price]

An hp agreement will usually contain a provision that if the debt is discharged in full, ownership of the asset passes to the customer. Thus, if there is equity, the trustee will sell the asset and pay off the hp settlement figure. Strictly speaking it ought to be that the trustee discharges the balance and then sells the asset but in practice it's usually the other way round. He won't sell unless he knows he will realise enough to settle the hp debt.

The court would usually find in favour of the trustee if this arrangement was challenged by an hp company, particularly if it perceived the challenge was motivated by the latter trying to make a windfall profit at the expense of the bankruptcy creditors.

In the past I have successfully obtained orders to seize and sell cars in a bankrupt's possession that were on hp, with the court ordering that the hp balance was settled first out of the proceeds of sale.

 

[Lease4Less]

I am not sure they need a court order if bankruptcy comes into things, as there is normally a clause in the agreement covering this ,

There will be a clause in the agreement and as I said earlier the finance company will always look to repossess.

However, if all the payments had been made on time with no arrears and at least one third of the total amount had been paid then they would need a court order.

However, I have yet to see a case where a client is about to go bankrupt who has kept up all payments on the vehicle.

 

[Alan R Price]

. . . the finance company will always look to repossess.

That's not my experience. There is usually a provision in a hire purchase agreement for the customer to acquire ownership of the asset on payment in full of the balance. That right would vest in the trustee in bankruptcy. If I came across a case, as trustee, where the finance company was trying to repossess and there was equity in the agreement I would apply to the court for an order either preventing seizure or directing that any surplus funds from the sale were paid into the estate. The courts don't like unjust enrichment. The finance company would be likely to be on the wrong end of a costs order as well.

 

[Spongebob]

Deleted post.

 

[Lease4Less]

Absolutely agree that if there is equity in the vehicle then the customer would of course be givin the opportunity to liquidate the asset.

It is very unlikely that the finance company would be willing to allow the customer to continue making payments as they will be in breach of the terms and conditions of hire.

 

[xLulzx]

If there is any "equity" in the agreement (i.e. there would be surplus funds after selling the assets and paying off the hp debt) the trustee would probably want to sell it. If it is a car that you need personally for your job or business you might be able to keep it as an exempt asset. OWG mentioned a value £1,500 and that is a good "rule of thumb". If there is less than £1,500 equity it is unlikely the trustee would be interested.

If there is no equity in the agreement, the trustee will disclaim it. It will then be for you to negotiate with the hp company if you want to keep it. My experience is that as long as there is somebody willing to take on responsibility for making the payments, the hp company would rather have a functioning agreement than repossess the asset and sell it at a loss. However going bankrupt will almost certainly give the hp company the automatic right to repossess and they sometimes do.

It is for High Value items eg: £120,000, another Company has taken over the payments but im not sure if that's in Black and White (down on the paperwork)