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jenni
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i cant see how they can get away with terminating your agreement for that amount. What does your agreement actually say about this - may be worth checking it out incase they have made a balls up on their part. I know places will start charging you for being in arrears but not terminate the contract completely. It seems to me they are being far from reasonable here. You say you are now up to date with your arrears. So what is happening now? Are you still paying for the agreement every month? Are they likely to repossess?
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