I am in arrears with the Hire Purchase on my car. What should I do?

Firstly establish that the loan is in fact a Hire Purchase agreement and don't get it confused with an ordinary personal loan. However if payments have been missed on a HP agreement the hirer may try to repossess the vehicle but this depends on how much you have repaid.

If you have paid more than a third of the debt

The creditor will apply to the court, which will issue you with a 'Claim Form', which gives you the opportunity to return the goods yourself. You will also receive an 'Admission form' which gives you the opportunity to make an new offer of monthly payment to the creditor, this form should be returned within 14 days. If the creditor agrees with the payment you offer you will be able to keep the HP item. However if they refuse the payment they will get a 'Return Order' from the court, this order forces you to return the goods.

If you have paid less than a third of your debt

Asking the creditor to agree new terms can prevent you losing the HP item, for example if you have missed payments but can now afford them and can pay a little extra towards the arrears, offer this to the creditor. Altering the length of the loan, the interest rate and/or the monthly payments could be achieved by asking the court for a 'Time order'.

A Hire purchase loan is a priority debt, so these monthly payments (along with a mortgage and secured loan) should be made in full before you make your unsecured credit payments