Falling into debt is a scary situation to find yourself in – especially if you have financial obligations you need to keep up with that you can no longer afford.
However, if your debt has escalated to the point where bailiffs are involved, it’s important to familiarise yourself with the kinds of items they are and are not allowed to take when they visit you.
What is a bailiff?
Before delving into the rules around bailiffs and car finance, it’s important you know what a bailiff is. Put simply, a bailiff (officially known as an enforcement agent) is a legal officer who is authorised by the court to visit your home and seize your belongings if you have an unpaid debt.
They can be self-employed or work on behalf of a bailiff company and are usually only brought into the debt recovery process after the debt has gone unpaid for some time and the person you owe money to (your creditor) has already tried many things to try and recover payment.
However, there are certain rules bailiffs must follow when they visit you and they can’t simply turn up and demand payment. In most cases, they’ll need to give you at least seven working days’ notice before they arrive to give you time to investigate the debt or make payment (which will stop enforcement action in its tracks).
How much debt do you have?
Is a bailiff the same as a debt collector?
Despite both having the same end goal – to recover payment of an unpaid debt – a bailiff is not the same as a debt collector.
The main difference between a bailiff and a debt collector is that a bailiff has more legal powers than a debt collector. This is because a bailiff has legal powers given to them by the court and can remove your belongings while a debt collector has no more legal powers than your creditor and can only ask you to repay the debt.
The other key difference between a bailiff and a debt collector is the types of debts they can collect and at what stage. For example, a bailiff is usually only brought in after court action to recover a wide range of debts while a debt collector can be used at any stage of the debt recovery process to recover most consumer debts.
What is car finance?
The term ‘car finance’ is a catch-all phrase used to describe the various ways you can borrow money to purchase a car or lease it for a fixed period before being given the option to purchase it.
There are many types of car finance, each with different terms, conditions, benefits, and limitations. Here is a brief definition of each of the main types of car finance:
Car loan
With a car loan, you choose how much you want to borrow and for how long. Once your loan has been approved, the money will be paid directly to you in a lump sum, allowing you to purchase the car in question, whether it’s from a private seller or a dealership.
From this point, you’ll need to start repaying the loan in monthly instalments plus interest for the agreed period. The better your credit score before applying, the better rates you’ll be able to benefit from.
It can be one of the quickest ways to purchase a car if you don’t have the funds readily available to pay for it outright.
Personal contract purchase
Personal contract purchase, or PCP, is one of the most common types of car finance. It works by making a deposit (usually around 10% of the total value of the car) and making monthly payments for the duration of the contract.
However, while you’ll be able to use the car as soon as you’ve paid the deposit, you won’t own it until you’ve made your final monthly payment (typically after three to five years). The longer the contract, the lower your monthly payments will be.
When you reach the end of your payment term, you’ll have the option to make a balloon payment to purchase the car outright or hand the car back to the dealer without any further payments.
Hire purchase
With a hire purchase car, or HP car, you make a deposit (around 10% of the car’s value) before making monthly repayments towards the loan plus interest. Generally, the larger the deposit, the better the terms will be.
The length of the repayment period is up to you but is typically between one and five years. Once you’ve made the final payment, you will own the car outright.
It is very similar to PCP with one of the only differences being that you will always own the car at the end of an HP contract while a PCP contract allows you to hand the car back at the end of your contract if you wish.
How do bailiffs operate?
Bailiffs typically follow a set process when visiting you to enforce a debt. We’ve outlined the main steps below:
Your creditor applies for a warrant of control
The first step your creditor will do when they want to get the ball rolling is apply to the court for a warrant of control. This is a legal document that gives bailiffs permission to visit you and seize your belongings and is required before enforcement action can begin.
You receive a notice of enforcement
The next step in the process is receiving a notice of enforcement, which is essentially a letter explaining why you are facing bailiff action and what your next steps should be (depending on whether or not you agree to owing the debt).
Arrange to pay the debt
Once you’ve received a notice of enforcement, you must decide how you’re going to deal with the debt (e.g. by paying it off in full or setting up a payment plan). It’s important to respond to the letter as soon as possible (ideally within seven days).
Bailiffs visit your home
If you don’t pay the debt – or at least arrange to pay it in instalments – bailiffs will visit your home. They don’t have to be let in on their first visit (unless they are there to collect certain debts like criminal fines) but if they are let in, they will make a list of items they can sell at auction to recover the debt.
Make a controlled goods agreement
If you can’t repay the debt in full but are happy to make regular instalments, the bailiff will draw up a controlled goods agreement. This lets you keep your belongings for the meantime, but they will return to seize them if you fail to stick to the agreed payment plan.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Can a bailiff take a car on finance?
If you’re expecting bailiff action and have a car on finance, it’s normal to worry about whether your car will be seized to recover the money owed – especially because cars are usually the first thing a bailiff will look for when they visit you.
In most cases, a car you’re paying for on finance can’t be seized by a bailiff because you don’t technically own it yet. However, if the debt involves the car, they might take it and sell it back to the car finance company to collect the debt against it.
Remember, if you own your car outright – either through after a car finance agreement or you purchased it in full – your car is likely to be the first thing a bailiff will look for to repay your outstanding debt. They can also clamp or remove your car regardless of whether they find it parked on the road or car park, but you can move it somewhere else if you’re anticipating bailiff action to lower the chances of them finding and removing it.
The only situations in which your car can’t be removed are if you can prove it is absolutely necessary for work and is valued at less than £1,350, it has a blue badge, it is a mobility vehicle, it belongs to someone else (known as third-party goods), or it is used as your main residence (e.g. a campervan).
I’m in debt and can no longer afford my car finance payments. What should I do?
Whether you’ve lost your job or your circumstances have changed, realising you can no longer afford your car finance payments can be worrying. But, depending on the type of car finance you have, you do have options.
Regardless of the situation, the first thing you must do is inform the lender as soon as possible. Some might be more willing than others to help you find a solution, but not keeping them up to date can lead to further problems and possible legal action down the line.
For example, they might allow you to defer your payments for a short period until you get back on your feet or extend the length of the loan, lowering your monthly payments going forward.
However, it is your right under the Consumer Credit Act (1974) to simply hand the car back if you have a PCP or HP agreement and you’ve paid at least 50% of the loan (including interest and fees). This is known as voluntary termination and can be a valid option if you know you can no longer afford the car, can live without it, and want to avoid any legal complications or extra charges.
If you’ve repaid less than 50% of the car, you’ll need to make up the difference before you can hand the car back.
It’s important to consider your long-term financial goals before taking out a car finance agreement. Most payment terms last around five years, so you’ll need to be confident that you’re in a position to make monthly payments for that long before making a final decision.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
What happens if I stop paying my car finance agreement?
It can be tempting to just stop paying for your financed car if you can no longer afford it, but this isn’t recommended and will likely cause some legal issues with your lender as it will mean you are breaking the contract you originally signed when you first took out the agreement.
In most cases, your lender will get in touch with you shortly after you miss a payment to discuss your situation and ask what can potentially be done to resolve the matter sooner rather than later. Failing to cooperate with the lender will lead to you being sent letters outlining the debt and what might happen if you don’t pay.
This will also damage your credit score, which is a measure of how likely you are to be approved for other credit agreements. In other words, if you don’t pay your car finance agreement, you could struggle to get a loan, mortgage, phone contract, and even a bank account for several years.
Some lenders will repossess your car if you still don’t pay, but this is usually a last resort and they should always try to come to an agreement with you to prevent this. If you’re struggling to afford your car finance payments and need free expert advice, don’t hesitate to contact a financial charity like Citizens Advice.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Conclusion
If you’re facing enforcement action over an unpaid debt, you might be wondering: ‘Can bailiffs take my car’? But if you’re paying for your car through a car finance agreement, it shouldn’t be seized as you technically don’t own it yet.
The only times a bailiff can seize your car is if you own it outright and it’s parked within close proximity to your home when they visit you (e.g. in your driveway, outside your property, or in a nearby car park).
It’s important to have a plan in place for potential financial difficulties when you take out a car finance agreement. Most people end up unable to afford their car finance payments because of an unforeseen emergency, but having savings in place to tide you over until you get back on your feet can stop you from falling into debt, facing legal action, and having your car repossessed.
