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JimLawyer
JimLawyer, Solicitor
Category: Law
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Experience:  Senior Associate Solicitor
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I took out a hire purchase agreement for a coach/minibus in

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I took out a hire purchase agreement for a coach/minibus in November 2019 for £89,500 from Close Brothers. I have to date made 5 payments amounting to £8500, leaving a liability of about £81,000.
JA: Where are you? It matters because laws vary by location.
Customer: I am a driver in London and my business is in the tourism industry taking tourists to visit different parts of the UK. Because of the pandemic that we are faced with at the moment, the industry is dead for at least until next spring given the current situation with Airlines and the quarantine rules coming into effect from next Monday. The outlook for my industry does not look very promising in the short term and as a result I have now decided to terminate the contract with Close Brothers. However, it has come to my attention that I have personally guaranteed the loan. In that respect, I would like to know my options before I speak Close Brothers.
JA: What steps have you taken so far?
Customer: I have not taken any steps so far. I am looking at the best way to proceed.
JA: Anything else you want the Lawyer to know before I connect you?
Customer: One final thing, I have a repayment holiday available until the end of June.

Hello, this is Jim, a dual-qualified lawyer (UK & Republic of Ireland) and happy to help you today.

A personal guarantee obviously makes you personally liable for the loan if the company cannot pay it. I do not know if there is a force majeure clause in your finance agreement? If there is, it could allow you to suspend payments for the duration of the disruption so it's worth checking your agreement. A lot of contracts have these clauses, also known as Act of God clauses. Was the payment holiday offered by them? And do you have any assets in your name?

Customer: replied 1 year ago.
I asked for a repayment holiday and was granted 3 months from April.
Definitely no clause re Force Majeure.
I own a house with my wife.

Thanks, ***** ***** potentially repossess the vehicle and sue for the balance if you do not pay - this would take them several months through the courts. They would sue personally and not the company given the personal guarantee - it would be worth speaking them to ask if they can extend the repayment holiday or even restructure the loan - they would rather get something than have to issue proceedings (the court issue fee alone would cost them 5% of the value, so at least £4,000 for them). Any chance you can release equity from the home if you had to?

Customer: replied 1 year ago.
No chance for any equity release. I Suppose I will have to re-negotiate the loan with them. I do not seem to have any other way out.

They "should" appreciate the impact the virus has had and along with mortgage providers they should offer a longer payment holiday. You can ask http://www.stepchange.org to speak to them for you if you wish - as long as you contact them, explain the position and see what they can offer then they should work with you. The courts are currently clogged full of claims so it would take them ages to get anything which forces you to pay them back. Even if they did, you could ask the court to pay by installments

I hope this helps? If I have answered the question would you kindly leave me a 5 star rating (at the top of your screen), any follow up questions are welcomed.

Many thanks,

Jim

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