how HP agreements fit into an IVA?

[ellie.n]

I'm looking at all of my options and trying to find some info referring to HP agreements and how they fit into an IVA? I bought my car on a HP agreement (options is the most popular term) 12 months ago under an agreement where I pay x amount for 3.5 years then at the end of that time I either pay the remaining balance in full or trade the car in for a newer model. How would an IVA affect that and would the car repayments still be included?

[melanie.n]

Hi there

In answer to our question hp payments can be incorporated into an IVA. Although creditors like the monthly hp payment to be under £250.

When someone applies for an IVA and has an outstanding hp agreement with what is termed as a 'balloon payment' at the end of the agreed monthly payments there are 2 options:

1 contact the hp company and ask them to accept continuing payments at the same rate till the 'balloon payment' is cleared OR

2 return the vehicle to the hp company at the end of the monthly payments

(in practice the hp company usually accept this arrangement as the balloon payment may be higher then the value of the vehicle at that point in time) most companies will not make a decision on this until the end of the period for hp monthly payments.

Th above information is obviously general and does not take into account initial value of vehicle, size of deposit, finance company etc. In practice a vehicle purchased for under £10k ie family vehilce under this type of sgreement usually has a balloon payment of around £5k or less there is usually not a problem in extending the monthly payments if this is the case.
Unfortunately there would be no scope within and IVA to pay the balloon payment yourself, unless of course it was paid by a third party, such as a relative who will not expect repayment of this money.
Hope this is of some help
Melanie.n

[carlmcmullen]

Hi Ellie,

I would normally suggest that you consider contacting the HP company now to change the agreement to a standard 5 year HP agreement without a balloon payment at the end.

The problem you have with these agreements is (in my experience) when you get to the end of the term the HP company will not renew your HP agreement as you are in a IVA and unless you can come up with the final payment look to take the vehicle back.

If you are not able to change the HP agreement now the you may want to consider returning the vehicle and including any shortfall into an IVA.

Carl