Voluntary termination - Finance company wants voluntary surrender

[1970]

Hi,

First post here - I will attempt to stick to the key facts.

Car financed in 2008, HPI regulated by consumer credit act. 1 year left to run.
Currently 3 months in arrears - I could pay this but I have purchased another car and wish to voluntarily terminate the agreement (I understand I will have to pay the arrears at some stage).
Notified the finance company that I wish to terminate. They sent a form for voluntary surrender making me liable for any shortfall when car sold at auction.
When challenged on this point they have now produced a termination notice dated 2 years ago and claim they terminated the agreement before I did.

So, despite claiming to have terminated the agreement 2 years ago, they never repossessed the car and continued to collect monthly payments. I think the termination letter was something they intended to do but as I caught up on some arrears 2 years ago they probably decided not to send the letter out.

What do I do? Just return the car to them and walk away?

1970.

[mystery1]

Re: Voluntary termination - Finance company wants voluntary surrender

http://paulatwatsonssolicitors.wordp...edit-act-1974/

Hire purchase agreements and s90-92 Consumer Credit Act 1974





Over the past few months i have dealt with a number of hire purchase cases whereby the creditor has taken possession of protected goods upon a debtor breaching the terms of the agreement regulated by the Consumer Credit Act 1974.
Protected goods are goods that more than one third of the repayments due under the agreement have been paid. Where the debtor has paid more than the one third of the total repayments before repossession the creditor would need an order of the Court to be entitled to repossess the goods. It is worth visiting the relevant sections of the Consumer Credit Act

90 Retaking of protected hire-purchase etc. goods.
(1)At any time when—
(a)the debtor is in breach of a regulated hire-purchase or a regulated conditional sale agreement relating to goods, and
(b)the debtor has paid to the creditor one-third or more of the total price of the goods, and
(c)the property in the goods remains in the creditor,
the creditor is not entitled to recover possession of the goods from the debtor except on an order of the court.
(2)Where under a hire-purchase or conditional sale agreement the creditor is required to carry out any installation and the agreement specifies, as part of the total price, the amount to be paid in respect of the installation (the “installation charge ”) the reference in subsection (1)(b) to one-third of the total price shall be construed as a reference to the aggregate of the installation charge and one-third of the remainder of the total price.
(3)In a case where—
(a)subsection (1)(a) is satisfied, but not subsection (1)(b), and
(b)subsection (1)(b) was satisfied on a previous occasion in relation to an earlier agreement, being a regulated hire-purchase or regulated conditional sale agreement, between the same parties, and relating to any of the goods comprised in the later agreement (whether or not other goods were also included),
subsection (1) shall apply to the later agreement with the omission of paragraph (b).
(4)If the later agreement is a modifying agreement, subsection (3) shall apply with the substitution, for the second reference to the later agreement, of a reference to the modifying agreement.
(5)Subsection (1) shall not apply, or shall cease to apply, to an agreement if the debtor has terminated, or terminates, the agreement.
(6)Where subsection (1) applies to an agreement at the death of the debtor, it shall continue to apply (in relation to the possessor of the goods) until the grant of probate or administration, or (in Scotland) confirmation (on which the personal representative would fall to be treated as the debtor).
(7)Goods falling within this section are in this Act referred to as “protected goods ”.
91 Consequences of breach of s. 90.
If goods are recovered by the creditor in contravention of section 90—
(a)the regulated agreement, if not previous terminated, shall terminate, and
(b)the debtor shall be released from all liability under the agreement, and shall be entitled to recover from the creditor all sums paid by the debtor under the agreement.
92 Recovery of possession of goods or land.
(1)Except under an order of the court, the creditor or owner shall not be entitled to enter any premises to take possession of goods subject to a regulated hire-purchase agreement, regulated conditional sale agreement or regulated consumer hire agreement.
(2)At any time when the debtor is in breach of a regulated conditional sale agreement relating to land, the creditor is entitled to recover possession of the land from the debtor, or any person claiming under him, on an order of the court only.
(3)An entry in contravention of subsection (1) or (2) is actionable as a breach of statutory duty.

The above is pretty clear yes? so why do creditors get themselves caught out? well the difficulty Mr Creditor seems to have is, in the cases ive dealt with, they have tried to argue that the debtor returned the keys, thus consented to the repossession and therefore the one third rule et al is irrelevant.
However, while a debtor can indeed consent to enforcement under the act, when it comes to repossession of protected goods the consent must be “informed consent” and in the cases which i have dealt with, the consent was clearly not informed consent.
The Court of Appeal case of Chartered Trust v Pritcher makes it very clear that recovery of protected goods must be by informed consent. So what does this mean? In Pritcher, the debtor had not been made fully aware of his statutory rights before the vehicle was repossessed. Such as the right to keep the goods after more than one third of the repayments had been made and seek a time order from the Court. This right was not explained to Mr Pritcher and therefore his consent was not informed consent. While the Pritcher case was relevant to the Hire Purchase Act, the editors of Goode agreed that the case would apply to the provisions of s90 Consumer Credit Act .
Given the amount of defective Default notices that we see, there is no doubt that some lenders will face a real difficulty if they repo protected goods after one third of the repayments have been made without securing informed consent of the debtor. It is my view that a materially bad default which does not provide the debtor with statutory information required by the Consumer Credit Act could invalidate any consent that the debtor may have given, if he did so not fully aware of his rights.
I have already dealt with such a case where the client was entitled to a refund of all monies paid under the agreement because informed consent was not achieved.



M1

[1970]

Re: Voluntary termination - Finance company wants voluntary surrender

Very interesting. Thank you for that.

So, if they come and take the car in accordance with their view that it is a voluntary surrender then they will be at fault as the goods are protected.
If they take the car in accordance with my request to voluntary terminate then I get to walk away without any further to pay.

Does that sound correct?

1970.

[mystery1]

Re: Voluntary termination - Finance company wants voluntary surrender

http://www.legislation.gov.uk/ukpga/...-of-agreements

I think you'd need to pay the arrears but i've not got much knowledge of hp although the way the CCA reads suggests i'm correct.

M1

[miliitant]

Re: Voluntary termination - Finance company wants voluntary surrender

Section 99 of the Consumer Credit Act gives the debtor the right to terminate a hire purchase agreement, simply by giving written notice of termination.

The right to terminate applies at any time before the final payment becomes due, unless the creditor has already terminated.

Contrary to the line taken by many finance companies,
the debtor need not have paid half the total amount payable,
and nor do they have to pay any arrears,
before exercising the right to terminate.

Sections 99 and 100 set out the debtor's liability on voluntary termination. The sections are complex,
but their main effect can be summarised in brief as follows.

If the sum of payments made and arrears before termination exceeds 50% of the total price, than the debtor is only liable to pay the arrears.
Otherwise, the debtor is liable to pay half the total price, less any payments already made.

so the debtor can terminate at any time if he has reached the 50 % mark

the debtor can terminate at any time before the 50 % mark but would be liable for payments still to reach the 50 % mark,

does not matter if the account is in arrears at the time or request to do a voluntary termination

[1970]

Re: Voluntary termination - Finance company wants voluntary surrender

Great, so for the first time in my career as a borrower the CCA is finally working in my favour.

I potentially have a stalemate until the finance company decide to do something. I voluntarily terminated a month ago but they claim they terminated 2 years ago (despite their termination not being acted upon - they didn't repossess the car, continued to collect payments and send statements etc). A side note to this is that when they sent the alleged termination 2 years ago, at that point I had only paid 25%.

I have now paid over 75%.

I guess sooner or later they will come and collect the car and claim it is in line with their own termination. At which point I will raise the CCA points above.

[1970]

Re: Voluntary termination - Finance company wants voluntary surrender

Actually Millitant, here's another thought. If their termination stands as of 2 years ago, then at the point I owed the outstanding amount from 25% already paid to the 50% mark meaning any other money I have paid since (over and above the 50% mark) is due back to me???

[miliitant]

Re: Voluntary termination - Finance company wants voluntary surrender

if they terminated the agreement then there is no agreement to collect on if you get my drift

they will have a hard job to justify this if payments have been continuing since the alleged termination date

have you done a subject access request on the finance company, to terminate they would have had to send you a default notice as well as the termination notice

what status does your credit file show on this debt, does it show terminated and/or defaulted

[1970]

Re: Voluntary termination - Finance company wants voluntary surrender

just checked my credit report - no default or termination recorded.

[miliitant]

Re: Voluntary termination - Finance company wants voluntary surrender

print that off and keep it safe

then send the subject access request to the finance company

me thinks the finance company are spinning you a yarn myself