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Hire Purchase Multiple Credit Agreements

Unless the creditor has already terminated the agreement or an accelerated payment clause has come into effect (removing the right to terminate agreement), The Consumer Credit Act 1974 gives the debtor the right to terminate the hire purchase or conditional sale agreement.

The agreement stipulates that the debtor will be liable for half of the total hire purchase amount: known as ‘the one half figure’ and will be liable for any arrears and damage to the hire purchase (HP).

A debtor may exercise this right at the beginning, end or any time during the agreement and if doing so, must give notice in writing and make the higher purchase (HP) goods available for return to the creditor.

If a debtor has reached ‘the one half point ’ in the contract and is considering terminating the agreement it may be worth negotiating with the creditor for sale of the goods to a third party. The above option and others may be of more benefit to the debtor economically.

Debtors may decide to exercise their right to termination for reasons such as depreciation in value of the second-hand vehicle or simply because they are struggling to meet the payments. Debt advise agencies have found that difficulties can arise when a debtor try to exercise their right to terminate their agreement. Creditors are reluctant to have second- hand vehicles returned to them and are therefore trying to counter a right to terminate the agreement with the use of multiple agreements.

Have you been persuaded to purchase any of the following ‘optional’ products?

Whilst taking out a hire purchase agreement, commitment to the above undoubtedly ties debtors into a multiple agreement essential making their liability far greater than the initial "one half figure." Effectively two agreements in one. In principal a hire purchase agreement for the supply of the vehicle and a secondary agreement: a loan to finance the purchase of the other optional products (with which commonly the supplier has links with). Therefore the debtors right to terminate relates only to the higher purchase part of the agreement.

If the debtor exercises their right to terminate under the Consumer Credit Act 1974, creditors will respond informing the debtor of their liability to pay the full loan amount on any optional products. A large number of debtors struggling to meet repayments have expressed their wish to terminate but due to their multiple agreement have been unable to do so. Paying a lump sum for products that will no longer be of use to them without the product is not an option. Many of these individuals have continued with their agreements.

However in some cases, Bournes specialist debt advisors are able to legally write off these agreements on grounds of unenforceability. Your agreement may be improperly executed and only enforceable in court. Bournes is finding more often than not that creditors are reluctant to test this in court.

Creditors may refer the matter to a debt collection agency. In this situation, if not before it is imperative that you seek sound legal advice. If a creditor is issuing a County Court claim or had judgement, we may still be able to defend or have the judgement set aside.

Do not delay, contact us today,

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