Terminated agreement

[Aym1233]

I have a finance agreement on my vehicle with marsh finance. I am £350 In arrears (one and a half payments) I have received correspondence stating they have terminated the contract. I have emailed them explaining my fincial situation has improved and can pay the arrears before 9am on Wednesday. And no more direct debits will be returned. Can they restart the contract?

I will admit I have been stupid and ignored their calls etc

[R0b]

Hello

Once an agreement is terminated, you can't simply restart it, otherwise it would have never been terminated in the first place (that would be suspension). However, if Marsh haven't followed the correct procedure then they may have wrongfully termiated the agreement and in which case your liability is discharged.

It would be helpful if you couldpost up a copy of the letter from Marsh with your personal info redacted. Did you also receive a default notice letter when you were in arrears.

Did you make any attempt to contact Marsh and let them know of your circumsances? If not, why not?

[Aym1233]

I am struggling to upload the image, but it reads.

"we have today terminated the above mentioned agreement as a result of your failure to remedy the breach of the default notice issued 3rd December 2018. As a result of the termination you are no longer in possession of the vehicle with our consent and therefore proceedings will be commenced against you with immediately for return of the vehicle"

the default notice was for the £100, if I'm honest i didn't even realise the direct debit for £250 last month had been returned.

I guess it was just running away from my problems.

[R0b]

If you received the default notice and did nothing to remedy the problem or no repayment arrangement was put in place, then it would appear that the agreement has indeed terminated and the the outstanding balance of the vehicle would be accelerated as due and payable immediately.

That said, repayment of the outstanding balance is calculated in the following way:

Total price payable - deposit - instalments paid - the option to purchase price - sale value from vehicle sold

The remaining balance is what you should therefore pay to Marsh. The letter clearly states that you have no consent to continue to use the car, and depending on your circumstances, you might want to negotiate with them to keep the car but pay the remaining balance by instalments. If they insist on giving up possession of the car then there's not much you can do, though you could make a formal complaint and then raise it to the Financial Ombudsman but not sure if they will side with you in that regard, except if Marsh are insisting you make a lump sum payment.

[Aym1233]

Thanks for your help, the letter was dared 3rd Jan and received Saturday, I emailed them and hoped I could come to an arrangement. What are the chances of this?

or what will happen next?

thanks

[Aym1233]

I may also add, they issued a default notice after one months of arrears. I may be wrong but I thought it was after 3 months they should do this.

[MIKE770]

a default issued take it as it is.

[R0b]

I presume you mean the letter of termination is dated 3rd January? If yes, then I'm afraid you dont have any rights as the contract is terminated.

Some lenders might come to an arrangement and allow you to continue using the car and to keep repaying the outstanding debt as if the agreement wasnt terminated but they are not obliged to do this.

Rather than sending any desperate emails to them you should think about sending a structured email settingsettihow you want to resolve the issue.

[Aym1233]

Thanks for your help! I managed to borrow the money off a relative and paid the arrears last night, via bank transfer. Emailed them to state this and see if we could come to an arrangement. I have no problems paying going forward so fingers crossed something can be done. Still waiting to hear from them.

[pt2537]

I presume you mean the letter of termination is dated 3rd January? If yes, then I'm afraid you dont have any rights as the contract is terminated.

Some lenders might come to an arrangement and allow you to continue using the car and to keep repaying the outstanding debt as if the agreement wasnt terminated but they are not obliged to do this.

Rather than sending any desperate emails to them you should think about sending a structured email settingsettihow you want to resolve the issue.

I disagree, s129 Consumer Credit Act grants the Court the power to make a time order, so there is an option although people seldom pursue that approach. I use Time orders alot, they work and they arent hard to get in place either

[R0b]

True, PT, but in this case as the agreement has been terminated, what benefit (other than the cost of an application to the court) would the OP get from making a time order than, let's say, the rules of the CONC cannot provide for?

Had the OP made an application for a time order following the default notice then the agreement could have been kept alive but sadly, she didn't. So on that basis Marsh Finance are rightly entitled to terminate the contract and accelerate payment and the return of the vehicle, if they wish.

A court, as far as I am aware, does not have the power re-instate the contract following termination and I would be interested to know if there was a case and on what circumstances (other than from an employment aspect), particularly under a time order.

[pt2537]

True, PT, but in this case as the agreement has been terminated, what benefit (other than the cost of an application to the court) would the OP get from making a time order than, let's say, the rules of the CONC cannot provide for?

Had the OP made an application for a time order following the default notice then the agreement could have been kept alive but sadly, she didn't. So on that basis Marsh Finance are rightly entitled to terminate the contract and accelerate payment and the return of the vehicle, if they wish.

A court, as far as I am aware, does not have the power re-instate the contract following termination and I would be interested to know if there was a case and on what circumstances (other than from an employment aspect), particularly under a time order.

The Court most definitely does have the power even if the agreement has been terminated, otherwise you would have a perverse situation of a DN being served, then the debtor makes a time order app, doesnt make payment and thus his agreement is terminated before the time order is heard. If that were correct then the Court would never ever be able to make a time order thus rendering s129 obsolete

However theres also a tonne of authority on time orders see Goode [5.249]

[pt2537]

The court's powers
These were considered at length in Southern and District Finance plc v Barnes [1995] CCLR 62, one of a series of consolidated appeals bearing not only on this section but on CCA 1974, s 136, below. Leggatt LJ, delivering the judgment of the Court of Appeal, set out the position as follows:
(a) When a time order is applied for, or a possession order sought of land to which a regulated agreement applies, the court must first consider whether it is just to make a time order. This involves consideration of all the circumstances of the case, including the creditor's position as well as the debtor's. (b) A time order should normally be made for a stipulated period on account of temporary financial difficulty. If the debtor is unlikely to be able to resume payment of the total indebtedness (see the note 'Any sum owed', above) by at least the amount of the contractual

instalments, no order should be made and the agreement should be enforced. (c) When a time order relates to non-payment the court must consider what instalments would be reasonable, both as to amount and timing, having regard to the debtor's means. (d) An amendment of the agreement may be included in a time order, if the amendment is a consequence of the time order (see CCA 1974, s 136). If the rate of interest is amended, it is relevant that smaller instalments will result in a liability to pay interest on accumulated arrears, in an extended period of repayment, though 'the high rate of interest usually payable under regulated agreements' already takes account of the risk that difficulties in repayment may occur. (e) If a time order is made when the whole outstanding balance is owed, there will inevitably be consequences for the term of the loan or the rate of interest, or both. (f) The court should, when making a time order, suspend any possession order that it also makes, as long as the terms of the time order are complied with.
In First National Bank v Syed [1991] 2 All ER 250, [1999] GCCR 1533, the Court of Appeal had already indicated that a time order should not be limited to instalments which the debtor can afford if these will be insufficient even to prevent the accumulation of interest on existing arrears, and this, as a principle, is not affected by Barnes. On the other hand, in examining the debtor's means, the court in that case was of the opinion that future improvements in his prospects can be taken into account, as well as his existing resources, if these are a reasonable prospect and not merely a hope or speculation.
Both decisions emphasise the necessity of having regard to the debtor's means as part of the exercise of balancing the interests of creditor and debtor. See further CCA 1974, s 130(1) and CCR 1981 Ord 49, r 4(7) (VI[3.8]). It appears to remain possible that the court may make a time order even though CCA 1974, s 130(1) does not apply and the debtor leads no evidence of his means; in such cases the court may have to act on whatever evidence is available, drawing inferences from what is known of the debtor's circumstances and drawing inferences from the pattern of default leading to the proceedings. There may be a similar problem in evaluating the means of a surety, as required by sub-s (2)(a), which is drafted so as to suggest that these are relevant even where the surety is not before the court.

Thats from Goode

[Aym1233]

To confirm, I have spoken with marsh, they have suspended the termination and arrears are paid so now back on track and I can breathe a sigh of relief. Lesson well learnt! Thank you so much for all your input

[R0b]

Good to know to hear that Marsh have agreed to continue repayments.

@PT, your point makes sense though it is S.136 that actually gives the right to amend the agreement which obviously needs to be read in conjunction with S.129, something I didn't particularly look at in any great detail.