Advice needed please - bought a car unknowingly with outstanding finance

[WinnieWoo]

My daughter bought a car in June last year from a private seller, she got all the usual paperwork and paid for the car using bank transfer, the seller sent her a screenshot of a HPI check and all seemed ok. In September a debt collection agency acting for the finance company contacted her to advise the vehicle had outstanding finance which they wanted to reclaim. We put in a complaint and handed over copies of all the paperwork and said we had good title to the car because it was purchased in good faith and she was unaware of the outstanding finance at the time of purchase. They are arguing that this doesn't apply because she did not buy the car from their client, the debtor. Again she did not know this but it turns out that the debtor somehow passed the car to his "friend" who sold the car on to my daughter. We are unable to establish whether the debtor asked his "friend" to sell the car for him or if his friend sold it without his knowledge. We argued the case and asked them to put it on hold until the case can be sorted out and they agreed, this was in January 2024. She heard nothing more and assumed all was sorted until early in the morning 3 weeks ago when she was woken up by a debt collector coming to get the car. My daughter and her boyfriend explained everything showed him the evidence but to no avail, they were threatened with being arrested, so they handed over the car and the V5.

I have since put in a further complaint with the debt collector company because their agent contravened most of the guidelines set down by the FCA and I asked them to return the vehicle until the matter is sorted. They did not uphold my complaint saying that the act does not apply to my daughter because she didn't buy the car from the debtor. I had also asked them to confirm how the car, financed in favour of the debtor, ended up with a third party. Was the car stolen or did he sell the car to a third party subject to finance? They refused to answer this quoting GDPR rules.

I have been reading an older post very similar to our case: Bought a car with outstanding finance, finance company going to repossess it - LegalBeagles Forum which is really interesting.

I would appreciate if anyone can give us further advice on how we can argue our case with the debt collectors and finance company and get my daughter's car back to her as soon as possible.

Many thanks.

[echat11]

Hi WINNIEWOO

Welcome to LB

I'm probably missing something.

Isn't this a fraud that's been perpetrated against your daughter?

What have the police said? No doubt they (third party etc) have done this before.

The third party (the friend) wasn't in a position to sell your daughter the car, the
car was on finance and still owned by the finance company.

Is this third party easy to locate?

Where was the car advertised?

[WinnieWoo]

Hi Echat11

Thank you for your response and for your welcome Yes we think this is fraud too but when she reported it to the police they said it was a civil matter they also confirmed the car is not reported as stolen by the finance company. Since the car has now been taken by the debt collectors she called the police again and was referred to Action Fraud who took the details and she now has a fraud reference number. The person she bought the car from we believe is now on the run and wanted by the police for other matters so can not be contacted. The car was advertised on Facebook and my daughter has screenshots of everything. It is abundantly clear that my daughter is an innocent party but the debt collectors are adamant the act does not apply because she did not buy the car from the finance company's client.

I have put in a response to their complaint response based on a template provided in the post I have linked above and they have given her a 14 day hold on selling the car on at auction, but any further advice on how we can get the car back would be gratefully received.

[WinnieWoo]

I have just had a further response from the debt collectors:

Thank you for your email.

We have asked one of our Lawyers to review the file and provide a response to the legal points you raise.

Section 27(1) of the Hire Purchase Act states:-

“This section applies where a motor vehicle has been bailed or (in Scotland) hired under a hire-purchase agreement, or has been agreed to be sold under a conditional sale agreement, and, before the property in the vehicle has become vested in the debtor, he disposes of the vehicle to another person.”

The section applies only where the debtor under a hire purchase or conditional sale agreement disposes of the Vehicle to another person. In this case, the debtor under the Hire Purchase Agreement did not dispose of the Vehicle. He confirmed (in writing) to us that the Vehicle had been disposed of without his knowledge or consent. For this reason, the provisions of the Hire Purchase Act do not protect Miss X. We have proof in writing that Mr A was not authorised to make the sale to Miss X.

Further, even if it was the debtor under the Hire Purchase Agreement that had disposed of the Vehicle (which it was not), the Act only protects a private purchaser, acting in good faith and without notice of our client’s interest. The Vehicle was sold at an undervalue, via Facebook and a full HPI finance check was not undertaken. Further, the Vehicle was purchased from outside a block of flats from someone who was not stated to be the keeper on the logbook.

We do have considerable sympathy with Miss X who has been the victim of a fraud. Miss X does of course have a right to reclaim the money paid for the Vehicle from the seller and to report this fraud by Mr A to the relevant authorities.

Our client is entitled to recover its asset and has carefully considered the legal position before doing so.

Kind regards

[echat11]

'In this case, the debtor under the Hire Purchase Agreement did not dispose of the Vehicle. He confirmed (in writing) to us that the Vehicle had been disposed of without his knowledge or consent.'

Has the Keeper of the car reported the theft and sale of the 'vehicle' to the police?
It seems he has informed the Finance company. Did the finance company advise him to report it to the police?

[WinnieWoo]

As far as we know he has not because when my daughter called the police originally they confirmed the car had not been reported as stolen. It is a question that I want to ask of the debt collection company when I respond as it doesn't make sense to me. My daughter also has a facebook message from the ex-girlfriend of the person she bought the car from saying that she was aware that "a friend asked him to sell it". We don't know if that friend was the person named on the finance agreement or not, so haven't mentioned this to the debt collection company.

[echat11]

As far as we know he has not because when my daughter called the police originally they confirmed the car had not been reported as stolen. It is a question that I want to ask of the debt collection company when I respond as it doesn't make sense to me. My daughter also has a facebook message from the ex-girlfriend of the person she bought the car from saying that she was aware that "a friend asked him to sell it". We don't know if that friend was the person named on the finance agreement or not, so haven't mentioned this to the debt collection company.

Logically, the keeper's first step should have been to report it missing / stolen to the police.

That's before reporting it to the Finance company. It might be an idea to contact the police, see if they can document the call your daughter made to check if the car had been stolen. Maybe check these peoples profiles on other media. I do think they've done this before. Build up a picture of these people you might find other nuggets, i.e. the ex girlfriend etc.

[WinnieWoo]

I will do thank you, meanwhile how do you recommend that I should respond to the debt collection agency's email above?

[echat11]

I will do thank you, meanwhile how do you recommend that I should respond to the debt collection agency's email above?

I would write back and state that all reasonable steps had been taken by Miss X prior to purchase even contacting the police to find out if it had been stolen, (they will highlight as they have, the following 'The Vehicle was sold at an undervalue, via Facebook and a full HPI finance check was not undertaken'. You can add that the Keeper hadn't reported the car missing / stolen which more then likely forms part of his agreement with the Finance company.

If you can get a Recording of your daughter's call to the police that would be good, you could transcribe it.

You need to find out when he wrote to the Finance company.

[WinnieWoo]

Are they right that if the debtor did not give consent or permission for his friend to sell the car that my daughter doesn’t have protection under the HP act?

[echat11]

Are they right that if the debtor did not give consent or permission for his friend to sell the car that my daughter doesn’t have protection under the HP act?

That seems to be correct -

https://www.casemine.com/search/uk/h...e%2Bact%2B1964

[WinnieWoo]

Hi again, we have a development - I have asked the debt collection company why the debtor did not report the car as stolen (both the police and a main dealer have confirmed the car is not and has not been reported as stolen), also if he has confirmed that the car was disposed of without his knowledge or consent, then why was Mr A in possession of the V5, keys and all relevant documentation? We have also sent them the screenshot of the ex-girlfriend stating that Mr A was asked to sell the car by his friend.

I have also said that they have mentioned in their email that my daughter is a victim of fraud (she has reported to Action Fraud and has a reference number), so this suggests their agreement that she is an innocent purchaser.

So we are hoping that this confirms that the debtor asked Mr A to sell the car and was involved in the fraud. Do you think this would now give her protection under the Act so that she can keep the car?

[echat11]

Hi again, we have a development - I have asked the debt collection company why the debtor did not report the car as stolen (both the police and a main dealer have confirmed the car is not and has not been reported as stolen), also if he has confirmed that the car was disposed of without his knowledge or consent, then why was Mr A in possession of the V5, keys and all relevant documentation? We have also sent them the screenshot of the ex-girlfriend stating that Mr A was asked to sell the car by his friend.

I have also said that they have mentioned in their email that my daughter is a victim of fraud (she has reported to Action Fraud and has a reference number), so this suggests their agreement that she is an innocent purchaser.

So we are hoping that this confirms that the debtor asked Mr A to sell the car and was involved in the fraud. Do you think this would now give her protection under the Act so that she can keep the car?

That is good news.

It clearly put's your daughter in a better position and the 'keeper' in the 'spotlight'.
It also puts the Finance company and debt collectors in the 'spotlight', why haven't
they asked the questions you've asked - 'then why was Mr A in possession of the V5,
keys and all relevant documentation?'