When is a secured loan not a secured loan?

abominableangel

Hello everyone

I'm hoping someone on here has faced the same predicament as us at some point.. or knows who I need to go to for advice.

My husband and I got a loan back in 2005 when we owned our own home.. however our house was compulsory purchased by the local council and we couldn't afford to buy a new house.. due to the council effectively making us homeless they offered us a council house, which we accepted.

However the company whom we had the loan off (welcome finance) insists on calling it a secured loan as they don't make loans of that size unsecured... but this loan is secured on thin air! our previous home has been demolished, it no longer exists.

we recently hit some financial difficulty and are just covering the minimum payment of £271.30, we applied for an IVA as it was the only viable option for us, we got turned down on the grounds that it was a secured loan.. but as I said earlier it is secured on nothing... What do we do?

I don't want to stop paying it and end us up in the soup, but we just can't afford to pay that amount.. we would never qualify for another loan and if we did the rate would be extortion itself.

does anyone have any ideas?

many thanks

abominableangel

bacard1

Who did your conveyancing (i assume that compulsory purchase still require one for the title change etc). Surely it is something that should of been pick up then as welcome finance have a legal charge on the property (same as a mortgage company). I would be asking them or even the council how it could of happened, why did you not pay it off when you got your payout?

CLAPTON

An IVA only makes sense for some-one who has assets to protect. From what you say you clearly don't.
whoever advised you to even apply for an IVA?
why was it the only viable option?

an IVA means you are defaulting on your loan so why not default anyway as you can't afford it?

best to speak to one of the free debt advise people; CAB, Payplan, CCCS

flossiejo

Or you can default and let them 'take' the house.

Sorry - evil and wrong *slaps own wrists*

euronorris

I'm also curious why this didn't come up when the council purchased the property, and what happened to the proceeds? Or, did the proceeds only clear the mortgage against it?

Either way, I'm not sure what action Welcome could take in this situation. After all, the property no longer exists.

But, I don't know what further implications there would be, so I would also recommend contacting one of the debt charities or CAB for assistance.

Brock_and_Roll

Obviously, the fact that the loan was originally secured, is no longer relevant as the house is gone.

Presumably the proceeds from the compulsary purchase were sufficient to clear the mortgage, but not the additional Welcome secured loan (I am suprised Welcome allowed the sale to go through).

So effectively you know have a unsecured loan owing to Welcome. If you have no assets to protect, then you should be looking at bankruptcy. An IVA does not look appropriate and will just be lining someone elses pocket!