Voluntary termination post agreement with outstanding arrears

[MBoro]

My mother has recently suffered a stroke and is unable to drive for the next 6 months and has had difficulty in making repayments over the length of the agreement. She has a HP agreement which is now out of the agreed 48 month repayment plan with outstanding arrears. So far she has payed back 43% of the money borrowed, however, after speaking with the lender the law 'half and two thirds' does not apply to arrears - Is this correct? I'm trying to understand what options I have available but the only options i have been given is either surrender or pay the full remaining arrears of £7k.

any advice is much appreciated.
thanks,

[Kati]

Re: Voluntary termination post agreement with outstanding arrears

[MENTION=71570]R0b[/MENTION] ??

[R0b]

Re: Voluntary termination post agreement with outstanding arrears

Morning,

I'm sorry but your post does not make sense. You've said she is now out of the agreed 48 month period but has only paid back 43%, how does that work out?!

You are entitled to terminate the agreement before the final payment becomes due. You can also terminate the agreement if you are in arrears provided that the agreement has not been terminated by the lender. As soon as the lender gives notice to terminate the agreement then the rights to VT is lost. Your post is suggesting that the agreement has not yet terminated but if she has received a default notice she has 14 days to rectify or to serve notice of her VT otherwise the right falls away.

[MBoro]

Re: Voluntary termination post agreement with outstanding arrears

Morning,

I'm sorry but your post does not make sense. You've said she is now out of the agreed 48 month period but has only paid back 43%, how does that work out?!

You are entitled to terminate the agreement before the final payment becomes due. You can also terminate the agreement if you are in arrears provided that the agreement has not been terminated by the lender. As soon as the lender gives notice to terminate the agreement then the rights to VT is lost. Your post is suggesting that the agreement has not yet terminated but if she has received a default notice she has 14 days to rectify or to serve notice of her VT otherwise the right falls away.

Hi R0b,

Thanks for your reply. Just to clarify, the contract started in May 2013 and was valid for 48 months which expired this year in May. However, we still have £7k in arrears to pay. No default notice has been applied and she was able to agree a repayment plan which will take a number of years to complete. From the original start date (may 13) to now, we have so far paid off 43% of the credit provided.


You mention ''You can also terminate the agreement if you are in arrears provided that the agreement has not been terminated by the lender.'' however, i've been told by the lender that this does not apply to arrears and/or when outside of the agreed 48 month period.

I'd like to understand if we are entitled to voluntary terminate (once we hit 50%) even if we are outside of the original agreed time frame of 48 months.

thanks again.
Dean

[MBoro]

Re: Voluntary termination post agreement with outstanding arrears

Hi R0b,

Thanks for your reply. Just to clarify, the contract started in May 2013 and was valid for 48 months which expired this year in May. However, we still have £7k in arrears to pay. No default notice has been applied and she was able to agree a repayment plan which will take a number of years to complete. From the original start date (may 13) to now, we have so far paid off 43% of the credit provided.


You mention ''You can also terminate the agreement if you are in arrears provided that the agreement has not been terminated by the lender.'' however, i've been told by the lender that this does not apply to arrears and/or when outside of the agreed 48 month period.

I'd like to understand if we are entitled to voluntary terminate (once we hit 50%) even if we are outside of the original agreed time frame of 48 months.

thanks again.
Dean

[R0b]

Re: Voluntary termination post agreement with outstanding arrears

If I read that right, then the lender is correct. If she exceeded the 48 month period then the final payment has already become due i.e. the 48th payment which is usually the balloon payment. So if she is paying off the balloon payment then I'm afraid you are out of luck and maybe she should have considered handing back the car at the end of the contractual period.

Until the balloon payment is paid off the car does not belong to her and your friend is right. The lender will sell the car and use the proceeds against the outstanding balance of what is owed and then she will still owe whatever is left over. I'm not sure that there is any other defence to this. The only other thing I can think of is to sell the car privately and pay off the remaining balance if your mother can afford the difference, though probably not if she is struggling. This is of course unlawful as the car doesn't belong to her but lenders will usually sell them at auction which attracts the lowest price possible whereas selling at a dealer or privately may give you a better value.

The alternative is to write to the lender, explain the circumstances in that she suffered a stroke and is vulnerable (I would leave out the 6 months bit) so would they consider collecting the car and writing off the remaining debt. If you do try this I would suggest trying to get a few quotes as to the car's value as you can include that in the letter of what it is likely to fetch. It's not guaranteed and the lender isn't obliged to do this but there may be something in the FCA Handbook which suggests lenders should take into account the debtor's current position and financial circumstances. If they refuse you could make a formal complaint and see if the FOS is willing to intervene on fairness and reasonable grounds as opposed to a legal one.

[MBoro]

Re: Voluntary termination post agreement with outstanding arrears

Thanks so much for the advice , much appreciated.