Why pay fees for a debt management plan? See how much we could save you
A fee charging debt management company is a firm that will charge you for debt advice and debt service. They usually take the first two months’ payments into your plan as upfront costs followed by 15% of your monthly payment plus VAT. The New Protocol launched in February 2013 will mean that the up front fees will be taken over six months. See Debt Management Protocol
There are some good fee charging firms operating in the debt industry and if you are happy with your firm then fine. However there are some shockers out there and we have the following guide to help you spot them, see our 7 point guide to spotting a dodgy debt advice website!
If you are thinking of starting a debt management plan or wish to transfer to a 'non' fee debt management plan and not pay fees then see how much we can save you by using the slide bars on our unique fee saving calculator above.
Page last updated Tuesday, 23 April 2013
You can watch debt finance specialist Mike Thomas as he investigates the rise in logbook loans and exposes how unscrupulous car sellers are shifting their debts to unsuspecting buyers. Watch here - BBC Inside Out - London
This is a self-help guide if you are experiencing problems with a logbook loan and is not legal advice.
We cover the following points;
If you do need legal advice then see our ‘Where to get Help’ section below with details of agencies which can help you.
If you need to know what a logbook loan is then visit - What is a logbook loan?
1. Log Book Loans New Codes of Practice
On the 1st February 2011 a voluntary code of practice was launched for all Log Book Lenders who are members of the Consumer Credit Trade Association, (CCTA) which deals with debt collection, enforcement of arrears and innocent purchasers of vehicles with previous log book loans attached.
You can view the code here - The Consumer Credit Trade Association - Log Book Loans - Code of Practice and it will help if you take time out to read it as it is referred to throughout the guide.
2. OFT Debt collection guidelines section
Many individuals in debt are often subject to unnecessary harassment by lenders so it is important that you know your rights and how to deal with over- zealous debt collection agencies.
The following link takes you to our page that offers the recently updated Office of Fair Trading Debt Collection Guidelines.
3. Bill of Sale
When taking out your loan you have to sign a Bill of Sale (BoS) along with the credit agreement. By signing the bill you temporarily hand over ownership of the vehicle to the loan company giving them the right to repossess the vehicle without a court order in the event that you default on the payments.
A BoS has to be registered in the High Court with seven days of it being signed and you can check to see if this has been done by writing to the High Court enforcement team at The Royal Courts of Justice, The Strand, London or visiting them in person. You will need to give the Court the name of the person who gave the bill of sale, the name of the loan company and the date of the bill of sale..
To be valid and enforceable a Bill of Sale must be in a prescribed format. The specific requirements are too lengthy to relate in this self-help guide and you should seek advice if you are unsure, however in the first instance you should check that it includes:
1. Date of the bill
2. Names and addresses of the Parties
3. Statement of the true consideration given
4. Acknowledgement of receipt of the advance
5. An assignment by way of security of personal chattels capable of specific description
6. That it is a monetary obligation (rather than any other) that is secured
7. Statement of the sum secured, the rate of interest and the repayment instalments
8. Agreed terms for the maintenance and defeasance of the security (ie that upon payment of the principal sum plus interest, the bill shall be void)
9. A clause limiting the grounds of seizure
10. Execution by the debtor
11. Attestation by a credible witness who is not a party to the bill
12. A schedule describing the secured chattels (this description must not appear within the body of the bill)
4. Time Order
What is a time order?
A time order is a way of asking the court to give you more time to pay a loan agreement if you have fallen behind with the payments. It can change:
* the amount you have to pay each month;
* how long the loan will last;
* in some cases it is also possible to change the interest rate.
A time order is particularly useful if you have a secured loan and your lender is threatening to repossess your home or your car.
The law has not been entirely clear on what the court's powers are when making a time order. Following two court of appeal cases, time orders seem to apply in two situations.
Time orders on the arrears only
Sometimes a time order can only help with how much you should pay every month on the payments you have missed, leaving the ongoing monthly payments unchanged. This might mean the court also needs to look at changing or freezing the amount of interest being added to the arrears and possibly the interest rate on the whole balance you owe under the agreement.
This is the case if the lender has only sent you an arrears notice (or in some cases a default notice) but the whole loan has not been called in. This is more likely where you have only had an arrears notice, as under the terms of most agreements the whole loan is called in automatically when the lender sends a default notice to you.
Time order on the whole agreement
You may have to wait for the loan to be called in before making your time order application if you want to ask the court to reduce the payments you have to make on the whole agreement and not just the arrears.
Sometimes a time order can be used to change the whole agreement, setting lower payments and interest charges, and in certain circumstances stopping interest being added at all. This can only be done when the whole loan has been called in by the lender, where the loan agreement has automatically terminated on default or once possession proceedings have begun.
To find out more information and how to apply for a Time Order then visit;
Alternatively call National Debt Line on 0808 808 4000 for more advice.
5. Your options according to your problem
Fallen behind with payments, in arrears, or think you are being threatened?
If you cannot catch up with your payments or the logbook lender is being unreasonable then think about applying for a Time Order. See more on how to do this above/below.
You may also be able to hand the car back to end the agreement. See more on this under section 4.8.12 of the Code of Practice.
Threatened with having the car repossessed?
You can serve an injunction on the logbook loan lender to prevent the sale of the vehicle at auction but you may need to get legal advice on how to do this. See 4.8.9 of the Code of Practice.
Another possible way to prevent the sale is take advantage of section 4.7.5 of the Code of Practice which states that ‘Members shall suspend, for a period of not less than 30 days, the active pursuit of recovery of a debt from a customer in default or payment difficulties under circumstances in which a bona fide debt advisor is assisting the customer in agreeing a repayment plan’.
Had the car repossessed, sold at auction and now being chased for a shortfall on the debt?
The debt collector/logbook loan lender has to work under the OFT Debt Collection Guidelines, read them so that you know your consumer rights. Also read the new Code of Practice and in particular section 4.8 Enforcement of Debt Collection. Seek advice if you believe that the vehicle was sold at undervalue. Under certain circumstances the debt can be put on your home, if owned but where a member of the CCTA has obtained a charging order under 4.8.10 (a) or (b), they should not seek an order of the court for the sale of the debtor’s home.
High debt collection fees, for example £12 a phone call, even if missed, or £12 a letter, one a week?
Read section 4.8.5 of the New Codes of Practice –‘ Members shall not impose charges, of whatever nature, on customers who are in arrears unless the nature of those charges are disclosed at the Pre-contract stage and are limited to doing no more than covering the member’s costs.
Check the paper work you were given in the Pre - contractual information (PCI) (section 4.3 in the Code of Practice) to see whether it includes what fee and charges there will be and how they can be charged.
6. Purchased a used car with an outstanding Logbook Loan?
Section 5 of the code ‘ THIRD PARTY PURCHASERS’ states that ’Members shall afford innocent purchasers of vehicles, that are subject to a Bill of Sale, the same protection as afforded under the Hire-Purchase Act 1964 Part III –“Title to Motor Vehicles on Hire-Purchase or Conditional Sale‟, but only insofar as title shall transfer to the innocent purchaser in the event that the Member failed to register his interest in that vehicle with a relevant Asset Finance Register Company within 24 hours of execution of the agreement.
Basically this means that if the logbook lender failed to register the loan on the vehicle you have purchased with an Asset Finance register such as HPI then you, the purchaser of the used car, may have new rights.
According to Graham Haxton-Bernard, head of legal and compliance at the CCTA who drafted the code of practice, this means that this translates as those who 'innocently purchase' a second-hand car in 'good faith' will gain the deeds to the car.
Depending on the circumstances of your purchase you may have clear title in law. Seek advice.
7. Where to get help
Marcus Bright at Maxim Legal and Commercial.
He has extensive experience in consumer matters relating to loans secured by Bills of Sale; and cases where vehicles under a bill of sale have been sold to unsuspecting purchasers. Send brief details of the nature of your problem (attaching documents if possible) and advice sought to: firstname.lastname@example.org and Marcus or a member of his team will contact you. Please note that this is not a free service but their rates are significantly lower than those charged by most solicitors.
Alternatively write to Maxim Legal and Commercial, 108 Shacklegate Lane, Teddington, Greater London, TW11 8SH.
Financial Ombudsman Service (FOS)
Monday to Friday - 8am to 6pm, Saturday - 9am to 1pm, 0800 023 4567
Free for people phoning from a "fixed line" (for example, a landline at home) 0300 123 9 123
Free for mobile-phone users who pay a monthly charge for calls to numbers starting 01 or 02
Trading Standards / Consumer Direct
Consumer enquiries and complaints are dealt with by Consumer Direct. Their regionally based advisors are specially trained to give practical advice on all kinds of consumer issues - from problems with cars to faulty household appliances. Call them now for any questions about your consumer rights, product or service issues.
Consumer Direct 08454 04 05 06 Consumer Direct
Latest news re Log Book Loans
OFT imposes requirements on Hermes following their acquisition of Log Book Loans
Details of what the OFT found wrong with the lender following a detailed investigation and on-site visit. Read more
Are some Log Book Loans now unenforceable following the latest OFT requirements placed on Hermes / Log Book Loans?
Marcus Bright, a Civil Litigation Consultant with Maxim Legal and Commercial gives his view of the implications for customers of Hermes. Read more
Can you help with a 'Group Action' on Log Book Loans?
Have you purchased a vehicle in good faith and later discovered that it was the subject of a bill of sale (or logbook loan) taken out by a previous owner? Perhaps the vehicle was seized from you by the logbook loan company or a demand for money has been made on you.
If this is you then read more here Group Action re Log Book Loans.
Are you owed thousands of pounds in mis-sold Payment Protection Insurance (PPI)?
If so we can help you claim in two ways, either use;
our free DIY template letters, or
a firm to help you with a LOW FEE of 12% + vat
Our recommended firm will handle all the claim on a "No Win, No Fee" basis for a fee of just 12% + vat, which is only payable if you have a successful claim.
It's that simple. Take me to: