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What are hire purchase and hire purchase debts?

Hire purchase or HP is a type of finance agreement used typically to buy vehicles and household furniture and appliances. In effect, you are leasing the items until final payment has been made.  It allows you to pay in instalments for items of higher value, but the goods are not yours until you have the made the final payment under the agreement.  That means that, if you miss any payments, the creditor can repossess their goods.

You can soon find yourself falling behind with hire purchase payments if you are experiencing financial difficulties generally. It’s a difficult situation and it’s one in which you need to act quickly: to get the best outcome for yourself, to prevent damage to your credit rating and to forestall the possibility of your creditors taking action to recover their goods.

What can I do to deal with hire purchase debts

It's more expensive if you default on HP agreements

What can I do to deal with hire purchase debts?

If you cannot afford to pay your hire purchase payments, you can terminate the agreement yourself at any time – but only if the creditor has not issued a default notice.

If you want to go down this route, you simply need to make your request for termination in writing (sent by recorded delivery).  The creditor will then reply by letter too, detailing how to return the goods or how they will collect them.

If there is any outstanding debt or shortfall after this, you can offer to pay it back in affordable instalments.

It’s better to approach your creditor before you default on payments to them, that way you will end up owing less money due to the way in which shortfalls are calculated.

Creditors can raise a court action against you

What can creditors do to recover hire purchase debts?

In cases where there are hire purchase debts, the creditor will send you a default notice after 3 months or so have passed since you first failed to make a payment.  The default notice allows the creditor to get their goods back, and, depending on the amount that you have paid back, the creditor does not necessarily need to take court action to recover their goods.

In fact, if you have paid less than a third of the amount owed under the hire purchase agreement, and the goods are not in your house or on private land, then a creditor can repossess them without having to resort to court action.

However, if the goods are in your house or on private land then the creditor will require a court order to gain access to them and repossess them.

Once goods have been repossessed, they are usually sold at auction.  You might think that that would be the end of the matter, but a creditor can come back with a demand for further payment if the goods do not realise enough money at auction to pay off the outstanding debt.  They will raise a court action to do this.

We are debt advice specialists

How can we help you to deal with your hire purchase debts?

If you are struggling with personal hire purchase (HP) debts, or you are being chased by creditors, or you are considering approaching a creditor with a repayment proposal, then please seek our advice first.

Our experienced advisers will guide you through your options. You can email them 24 hours a day on

Don't panic

What if I am dealing with other unmanageable debts as well as hire purchase debts?

It is quite often the case that people struggling with hire purchase debts are also trying to deal with a range of other unsecured debts too.

This simply reflects general financial difficulties that anyone can find themselves in, given the right set of circumstances.  If this is you, don’t panic, there are ways of dealing with such situations.

Debt Arrangement Scheme

One way, if you live in Scotland, is a Debt Arrangement Scheme (DAS).  Set up by the Scottish Government, the Debt Arrangement Scheme is a useful alternative to insolvency.

It is an effective way of preventing aggressive court actions being taken by creditors including HMRC,  banks, etc. and it allows you to manage your unsecured debts and work your way to a debt-free and much happier future.

Protected Trust Deed

Other options we can explore with you include a Protected Trust Deed if you are dealing with unsecured debts of £5,000 or more, and you live in Scotland.

A Protected Trust Deed will help you pay off your debts while making life much easier for you and those close to you.

Although it is a form of insolvency, it is really simply a formal agreement between you and your creditors.


If you are a resident in Scotland and have over £3,000 of unsecured debts that you cannot pay back, then bankruptcy may be an option for you.

It gives you a way out of what can be seemingly overwhelming debt. Filing for bankruptcy in the right circumstances, can be the correct thing to do.

It is best to take expert advice before considering bankruptcy.

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