Hire purchase debt

Hire purchase generally refers to credit taken to purchase goods and secured against items such as cars or household items such as furniture and electrical goods.

Goods bought on hire purchase cannot be sold until payment has been made in full. This is because the goods are not classed as yours until the end of the payment agreement.

If payments are not kept up to date, it is possible for the creditor to reposess the goods. The contract agreement between you and your creditor should state how much you need to have paid on the goods which will prevent the creditor from reposession.

Generally, if you have paid a third of the total amount, the goods are then classed as “protected goods”, this means the creditor must obtain an order from the court for permission to reposess.

If a creditor takes back the goods from your premises without a court order or your permission, and you have repaid over a third of the amount, you may be entitled to a full refund on the money you have paid under the agreement.

If you are struggling to make the repayments on your hire purchase agreement and the creditor has started recovery procedures through the court, it may be possible for you to keep those goods if you are able to offer your creditor an acceptable reduced monthly repayment.

If proceedings have begun, you will receive a claim form from the court known as an application for a “return order” as well as a hearing date which should be held in your local county court.

There will also be a N9C form which you will need to fill in and return within 14 days. It is necessary to fill in this form if you wish to stop the return of the goods and offer a monthly repayment.

If you have paid back less than a third of the agreement and you wish to keep the goods, you will need to get in touch with the creditor to propose a reduced monthly payment.

If the creditor finds the offer of a reduced payment acceptable, a new agreement will be set in place. This agreement may be temporary and reviewed after a few months to see if your situation has improved and if you are able to increase your payments.

If your situation is temporary and you have received an arrears or default notice, you can apply to the court for a time order under the Consumer Credit Act 1974. The court may be willing to accept the Time order depending on your individual circumstances.

If you no longer wish to keep the goods, you can either terminate the agreement and return the goods, or wait for the creditor to terminate the agreement and repossess the goods. You will then be informed if there are any outstanding payments to be made by yourself.

Call our specialist debt team on 08000 915 004 to find out how we could help you.