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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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We have a car that is on an HP agreement. About a year ago

Resolved Question:

We have a car that is on an HP agreement. About a year ago we moved banks and didn't have a record of the bank details for the HP company. We emailed them and phoned them but received no reply. So we waited for them to contact us, and they didn't. About a month ago, I tried again, and this time contacted the agents who had put us in touch with the HP company. They tried on our behalf, but still no luck. The HP company appeared to have disappeared. Their website was gone, the numbers were not in use.
Last Friday (the 13th) I received an email from a firm assisting the HP in the process of voluntary liquidation. They are asking us to make an offer of settlement.
So my problem is this. There is a lot of help online about what happens if you fail to keep up payments to an HP company, but virtually no help if the HP company goes into liquidation. Under the terms of the HP contract, the car is owned by the HP company until it is paid for in full, so the car is theirs. If they repossess their asset and then sell this at auction, and there is shortfall - which there will be - they could theoretically persue us for the balance. This seems grossly unfair, as this situation has arisen through no fault of ours... or at least minimal fault (we misplaced their bank details).
What would your advice be?
Thanks
Robin Walmsley
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

Would I be correct to assume that you have not been making payments under the hire purchase agreement since you lost touch with the HP company please?

Joshua :

If that is correct roughly how far behind with payments do you think you are?

Customer:

Hi Joshua, correct we stopped payments in February 2014, I have an email from the firm of liquidators who have all the figures

Customer:

I also have a copy of the HP contract.

Customer:

My dilemma is that the current market value of the car is about 5k whereas they are asking the toal outstanding of £10542.50

Joshua :

Thanks. Are you in a position in principle to make up these payments should they be demanded?

Customer:

they have asked for

Customer:

"

From a review of the Company’s files and bank statements, the last instalment received from your wife was on 3 April 2014. Consequently, arrears are outstanding from May 2014 to February 2015 totalling £1,975 (not including penalties of £200) and your wife is in default of the agreement, which still has 3 years left to run. The total amount currently outstanding under this agreement is £10,542.50. Please note that as the vehicle has not yet been paid for in full, title to the vehicle remains with the Company.

As the the Company has ceased trading and will shortly be subject to insolvency proceedings, we would like to discuss the possibility of agreeing to an overall settlement with your wife in order to deal with this matter.

Accordingly, please confirm whether your wife is in a position to make a settlement offer, with a view to bringing this matter to a close. If so, please let us have your best offer for a full and final settlement.

Alternatively, please confirm if you wish to comply with the ongoing terms of the agreement. Payment of £2,175 representing the outstanding arrears and penalties should therefore be made to the following account:"

Customer:

I would question whether they could actually enforce the penalty of £200, as we were waiting for them to supply us with bank details.. I have emails to prove this

Customer:

however, we could pay the £1975 and we could resume payment of the monthly instalments. but what what would the point be if they subsequently terminated the contract and repossessed the car

Customer:

Its possible we could raise enough money to cover the current market value of the car .. of around 5k, but I don't know if they liquidators would accept 50% of the amount outstanding

Customer:

My general query is, what is our legal position if an HP company liquidates? What is the position of all the customers they have who have cars in agreements?

Joshua :

Thanks. Are you in a position in principle to make up the missed payments?


Customer:

yes we could.

Joshua :

thank you.

Joshua :

Your legal position is not changed by virtue of the hire purchase companies insolvency. You continue to have a contract with the company until such time as it may be struck from the company register. Presently, from what you say, it is still being dealt with by a receiver

Customer:

But I'm not going to, if the contract was terminated and we had to pay the balance. I would rather take my chances in court

Customer:

Lets assume it was struct from the register, what would happen then?

Joshua :

Accordingly, from your perspective, the position is unchanged from what it would be if the hire purchase company was still trading. If you have missed payments (although through no fault of your own) these must be made up or you will be in breach of the agreement. If it is your desire to simply continue with the agreement as originally agreed, you can do so. The receiver is bound by the terms of the agreement just as the hire purchase company would have been had to continue trading. If this is your wish, the receiver may seek to sell the hire purchase agreement to a third party, but whatever you decide, it does not affect the agreement terms from your perspective.

Joshua :

I agree that penalties would be difficult to enforce if you can demonstrate that they failed to collect payments and.or were and uncontactable despite your best efforts

Customer:

Ok this is very encouraging, I will probably make a ridiculously low offer for final settlement and if thats not accepted, make up the arrears and continue with payments.

Customer:

BTW If I make any further email correspondence with them, should I put "WITHOUT PREJUDICE" at the top of the email?

Joshua :

having said all that, whilst as discussed above, you can simply elect to continue on the terms originally offered as if nothing has happened albeit you are presently doing with the receiver and should you decide to do so, the receiver may attempt to sell the agreement to a third party, which means you will potentially end up dealing with an entirely different company, you can require those terms to be abided by. Having said that because of the situation with the hire purchase company, the receiver will likely be opentwo offers in relation to the car. This seems to be the case based on the correspondence you have received. Therefore, should you wish to do so, there may be an opportunity for you to acquire the car at a knockdown price if you are able and willing to make a cash payment for it.

Customer:

Sound advice. Ok thank you very much

Joshua :

As above, there is no requirement for you to do so, but in such situations, cash is king and receivers will often be prepared to accept fractions of debts in settlement as it is better for them to have some cash now than all the cash much later. This does not mean that the receiver will accept anything but if this is of interest to you, you could start by offering something low and then negotiate. If the receiver demands something that is too high in your opinion, you can walk away and elect to simply continue with the agreement you took out in the first place

Joshua :

A pleasure. Good luck with your negotiations should you decide to pursue them.

Joshua :

If I can assist any further as the situation develops please do not hesitate to revert to me

Joshua :

If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though

Customer:

Many thanks. Bye

Joshua :

Best wishes

Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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