Will the car be repossessed under the IVA?

[lee_pc]

My wife and I are thinking about taking an IVA. PArt of our debt is my wife's car, which is on finance. Will the car be repossessed under the IVA?

[MelanieGiles]

Lee pc - welcome to the forum

Is the car financed on a hire purchase agreement or a fixed term unsecured loan. If the former, you will need to continue making the repayments, but if it is subject to an unsecured loan then the lender has no proprietory rights over the vehicle so it should be safe.

Notwithstanding these points, is the car is of high value, or the HP repyaments are high, then creditors may wish you to find a cheaper option during the IVA.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Oliver]

If your car is on unsecured finance then this debt will go into your IVA and your car will NOT be repossesed.

If you have a Hire Purchase agreement on the Car then this is a secured arrangement and will be kept out of the IVA and you will be able to continue to pay the agreement.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[lee_pc]

Hi Melanie

The honest answer is I don't know. How would I find out? The finance was provided by Citroen Finance. The debt is only £15000 incluging the car, so wouldn't reach the required amount for an IVA without it. Is that correct?

Many Thanks for your help

Lee

[Storm]

You would need to check the documentation it will state that it is a Conditional Sale agreement or Hire Purchase agreement.

Citroën Financial Services normally provide Hire Purchase agreements unless you are on there Elect plan. If you are on the latter it may be worth considering early termination..... a number of complaints about these schemes with big lump sums being due in year 3.

[iva_squirrel]

Hello lee pc,


If it is Hire Purchase, you need to keep up with the payments. An allowance for which will be made in your expenditure schedule.

If you decide to give the car back, shortfall can be included in your IVA.


Regards,


Julia

For more information about IVAs, please visit my website:
www.supersonicsquirrel.net

[jamesfalla]

As Storm says, if your Citroen agreement is HP, this will be stated on the paperwork. If you are not sure by looking, call the company, they will soon tell you.

If the agreement is HP, then the way you calculate the value of the car is take the current trade value and deduct this from the remainder outstanding on the HP finance. eg if trade value = £5000 and outstanding finance = £15,000, then outstanding debt = £10000 (ie in this example, your car is worth negative £10,000)

If the HP is relatively new, it is pretty normal for the car to have a negative value (especially given the bottom has fallen out of the second hand car market so trade values are so low). This is actually good if you are considering an IVA, as there is no asset value in the car at all. This means there would be no point taking the car away from you.

As Melanie says, your creditors will normally allow you to keep up your car HP payment in your budget as long as it is a reasonable amount. An example of unreasonable would be if the HP you are paying is more than the proposed monthly IVA payment to your creditors

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[neverending]

Just a point regarding HP,years ago I worked for a bank servicing the motor trade and part of a HP agreement is that you can simply hand the car back if you have paid a certain percentage of the total agreement,from memory 50%.Not certain if this is still the case but I,m sure Storm can confirm this...or not.

[Storm]

If you have paid 50% of the agreement you can hand the car back (Voluntary Termination).

The problem with the Elect plan is there is a significant deferred payment at the end (know as a balloon payment) which means at the end of the three year agreement clients end up with a not so small demand for shortfall payment.

[lee_pc]

Hi Everybody

Thanks for your help so far. The Paperwork says 'Conditional Sale Agreement' WHat does that mean with regards to an IVA?