Are we liable?

[Alfie2006]

We are being chased for money by two credit companies.
We bought a car on HP from a garage kept up with payments then part-exchanged it for a new one in April 07 at the same garage. We then part-exchanged the new one in May 08 for another car at the same garage. The garage then went into liquidation 2 weeks later. The DVLA have change of details of owner on both cars and we dont know where the cars are.
Both finance companies are saying the garage didnt change the details - we cant pay these off, they run into thousands.

[themas]

I am assuming that both the cars you part exchanged were on HP. If so, they did not belong to you or to the garage which took them from you - they belonged to the finance company.

Even if you did not tell the garage they were on HP (& I gather from your post that you did) the garage had a liability to do an HP check and - if they didn't do one - the garage did not obtain good title to the cars. However, if the garage then sold them to a private individual (not another dealer) who was not aware of the situation, that person would get good title and the car could not be reclaimed from them. Nonetheless it would be a good idea to get from DVLA (or for the finance companies to do this) the identity etc. of the new owner because if it is a dealer they may not have good title. (I believe you would have to show good cause to get the information and pay DVLA a small fee - ask them.)

I suspect the HP agreements may have something in the wording saying the car must not be disposed of without the finance company's agreement. I assume you did not yourself contact the finance company on either occasion. What arrangement did you make with the garage? Was it left that they would pay off the rest of the HP? If so, is this in writing or did you just let them tell you verbally they would do it and accept that?

If no-one told the finance companies at all what had been done then I'm very much afraid that - so far as they are concerned - you are still liable because you entered into the contracts with them and they are still valid. You would then have to make a claim against the liquidator of the garage (or possibly against the owner in person if it was a sole trader), but if it was insolvent you would be unlikely to get any money.

You really need some specialist advice about this - which probably means paying to see a solicitor. Or you could take all the papers to your local CAB and ask them to see whether their

[Skyline D]

I don't quite understand this.

When you made the first trade in one of two things MUST have happened. Either you signed up for a new HP with the SAME HP company in which case any o/s finance difference would as a matter of course be rolled into the next deal. Or the HP was with a different company and the original one needs to be 'settled' for the deal to be complete. Now either it was settled or it wasn't. If it wasn't then they'd still have been taking money from your account in the year and a half since. Have they been doing this? If not it would seem they accepted your role in the deal was over and any claim they would have if it was never paid would be over the garage and its liquidators, not you.

Exactly the same process would occur on the second trade in. It was May 08, seven months ago now. Either they've continued to take monthly payments from your account since then or they haven't. If they haven't then your deal was over and it was the garage who owed any outstanding balance.

[Alfie2006]

Thats correct -skyline. any DD's were stopped after we part exchanged both cars. We havent been chased by either credit company until now.
As far as we knew the garage contacted both credit companies and gained a settlement figure and that was used so they could work out how much we could have for the next car (on both occassions).
They were different credit companies.

[themas]

So there was a delay in the credit companies chasing for the money after the DDs were cancelled. (I assume they were cancelled by you & not by the creditors.)

Unfortunately for you, that delay does not mean they can no longer claim against you. A creditor can take Court action to enforce a debt at any time up to 6 years after it was last acknowledged or a payment made on it.

It seems from what you say that the garage just kept the money, but - as I said before - if you have nothing in writing I suspect you will have great difficulty avoiding liability to the creditors.

[Skyline D]

I am presuming you mean YOU cancelled the direct debits rather than the credit company stopped taking the money.

I don't think that was overly clever to be honest (though hindsight is wonderful) as, had the companies continued to take their payments you'd have know there was a problem and addressed it much sooner. At the very least you surely wouldn't have bought a second car from the same garage and trusted them again?

Surely though in the year between buying each car if no-one had been paying the o/s HP on the first car then the company must have been looking for their money? Did they never ask you for it?

I don't know for sure how you actually stand legally here and I think you need to be taking legal advice on it, possibly from the CAB if you can't afford your own solicitor. I rather suspect though it will end up being your responsibility to ensure the finance was paid off.

[Alfie2006]

Thats what I am begining to suspect. We did stop the DD's because the garage told us to.
We havent been chased at all for either of the cars before now. I think we will go to a local CAB to see if they can help us. I'm assuming if the DVLA have a different owner now, that should count for something.
Thanks for your advice though.