Letter chasing defaulted sum - ignore or reply?

EHL123

In 2005 I ended a violent relationship and moved away from my ex (from England to Scotland). The house that we owned together was put on the market, but my ex did his best to put off the sale (missing viewings, being rude to viewers, leaving the house in a state). He continued to live in the house and make the repayments on both the mortgage and secured loan that we had taken out (for a new kitchen, bathroom, boiler etc that were not even installed until after I left). But as he was being difficult, I made a point of writing to both lenders to inform them that I had moved out and that he was responsible for the repayments until it was sold. I knew this wouldn’t legally mean anything, but I wanted to make them aware I was no longer living there. Eventually two years later (in 2007) the property was sold as a part-exchange when my ex bought a new build. I didn’t receive any money from the sale, as apparently there was only enough to cover the liabilities. But I was just glad to have it over with! The solicitor sent me the documents to sign and I posted them back, and that was the end of it.

That is until I got a copy of my credit file a few months ago, and found out my ex had been in arrears with both the mortgage and the loan. The mortgage is showing as cleared in August 2007 when the house was sold, after several ‘arrangements to pay’ were added (obviously he had contacted them to say a sale was in process). But the secured loan is showing as defaulted with a £17k outstanding balance. I raised a query with Equifax because a) the loan was secured on the house, and therefore would have been paid off when the property was sold, and b) the default was registered a week after the sale. I thought it had been added in error and asked for it to be removed. Equifax looked into it and said the information was correct and the default would remain. I didn’t understand why but I couldn’t really be bothered with the hassle, so I decided to just to wait until the six years had passed and let it disappear.

However today I received a letter from the lender telling me that when the house was sold it did not settle the entire loan and 17k was still outstanding. The letter gave me two options - pay a lump sum or arrange a monthly payment plan - or else they would start sending ‘representatives’ to my house! I have no intention of paying anything - I know my name was on the loan agreement but I didn’t benefit from the money at all, and I made it very clear to them that I was no longer in the property. They didn’t bother to write to me to say the loan was in arrears, despite having my new address. This is the first contact I have ever had from them while I've lived up here. And the solicitor made no mention of an outstanding balance when the house was sold (I’m not even sure how there could be a balance - I thought the whole point of a secured loan is that it has to be repaid to release the charge on the deeds, otherwise the property can't be sold?).

I don’t think it’s a coincidence that I’ve never heard a peep from them, and then a few months after raising a query with Equifax I get a collection letter (shouldn’t have woken the sleeping dragon!). So where do I stand? Are they just chancing their arm, sending scary letters in the hope I’ll pay something? Or can they legally take this further to recover the debt? They’ve not registered a CCJ against me, only the default three years ago. I thought, perhaps naively, that once a company had registered a default they couldn’t take you to court for the debt, and after six years it would just disappear. So what will happen if I just ignore them? Can they add any more adverse info to my credit file (the rest of my credit file is squeaky clean and I want to keep it that way)? I'm really not sure what to do. My ex is living in his fancy new house and now I'm being chased for his debts - it beggars belief that he's still ruining my life from afar!

Any advice would be gratefully received

PS: lender is London Scottish

Tixy

If there is insufficent equity to pay off the mortgage and any secured loans then the debt will still be owed and both parties can legally be chased for the remaining amount. It would never just disappear if the property was sold for less.

Usually they have 6years to take you to court (irrespective of the default) however secured debt shortfalls can be recovered for up to 12years. So they have 12years from the date or repossesion or last repayment if later to take you and/or ex to court.

EHL123

Thanks for the info Tixy

I'm not really sure where to go from here then, because there's no way I'm paying a penny of it. I have my own house and family to keep now, without parting with my hard earned money to repay his debt. I moved up here literally two weeks after the loan was taken out (and have proof of this), the funds were paid into his bank account and I wrote to them informing them that I was no longer involved with him - I actually asked for the loan to be cancelled but my ex wouldn't return the money, so they couldn't do anything. It's not as though I even benefited from the home improvements he made - I didn't live there at the time, and he was the only one who benefited from any increase in value because he part-exchanged the house, I received no money from the sale at all. I also don't understand why the solicitor didn't warn me about this - as far as I was concerned, the property was sold and the loans were repaid in full, nobody warned me otherwise. The solictor must have been aware of the shortfall, so I don't understand it. Gah! :mad:

The annoying thing is, the lender obviously had my address details on file because they've written to me now. So they had no excuse for not informing me in writing when the loan defaulted in 2007, or when the sale proceeds didn't cover the amount oustanding, and then they suddenly pop up out of nowhere three years later demanding payment, with no correspondence in between. It's a joke. I really don't know whether I should write to them explaining the situation and redirecting them to my ex (and complain about their lack of correspondence - i.e. point out that I did not receive a default notice etc), or just ignore their letter and see if they write to me again. It seems they can't register a CCJ against me because I live in Scotland, so they would need to sue me through the sheriff's court instead - at which point I could argue that they didn't send me the correct paperwork when the loan defaulted (I had lived up here for two years by then - employment, bank accounts, driving licence, electoral role all registered at this address - so it wasn't as though I had just moved). But I would rather avoid the costs involved in going to court.

DVardysShadow

EHL123 wrote: »

Thanks for the info Tixy

I'm not really sure where to go from here then, because there's no way I'm paying a penny of it. I have my own house and family to keep now, without parting with my hard earned money to repay his debt. I moved up here literally two weeks after the loan was taken out (and have proof of this), the funds were paid into his bank account and I wrote to them informing them that I was no longer involved with him - I actually asked for the loan to be cancelled but my ex wouldn't return the money, so they couldn't do anything.

Your break up with your ex is private grief - sorry to be so blunt about it. You knowingly borrowed the money and signed the charge which secured the loan. You entered into a Joint and Several agreement with your partner. As far as the lender is concerned, job done - your relationship issues are neither here nor there to them. And if it comes to going to court, their case would stand and if the court even let you speak about your relationship issues, it would only be to humour you - it might get you sympathy, but the lender will get their judgement.

Don't put your head in the sand about this - £17,000 is enough to take you to court. It is enough for a lender to make you bankrupt or to put a charge on your present home.

If you are not going to pay a penny of this, then you are going to have to be cunning and devious and put the lender onto your ex - or extract the money by taking court action yourself.

Sorry if this is not what you would like to hear, but I think it is better for you not to be under any illusion about the lender's rights against you.

dancingfairy

I might be tempted to phone National Debtline (they have a scottish one) or try and get some legal advice - don't know whether you would qualify for legal aid or free legal advice?
Might be worth having a check.
df

Tixy

I think it would need to be E&W national debtline as the property and loans were taken out in England (well thats how I read the post anyway).

EHL123

Thanks for everyone's advice

I don't expect the lender (or the court) to take the relationship issues into account, my issue is the fact I was never made aware of the arrears or the outstanding balance after the sale, despite them having my contact details (both from my letter in 2005 and the solicitor's forms). They knew I didn't live at the property (and actually the default was issued after the property was sold, so nobody lived there). If I hadn't checked my credit file, I would have been completely in the dark about the outstanding amount until this letter arrived today, three years after the property was sold and the matter was long forgotten - as far as I knew, all the debts against the house were settled when it was sold to the builders, and I haven't thought about it since then. If I'd known the loan wouldn't be cleared, I would never have let the part-ex go ahead (the builders offered lower than market value but I agreed because it was supposed to clear all the debts, which obviously it didn't). I'm quite suprised at the solictor actually - I would have thought they'd be duty bound to state that it would still leave a debt, but I've checked and there's no mention of it in any of the paperwork or letters they sent.

The 17k also came as a suprise, as the original loan was only 12k and my ex made repayments for 18 months before he got into arrears (at £500 a month), so he'd already paid off about 9k. That means a hell of a lot of interest/charges must have been added to get it up to 17k. It made me wonder if he'd borrowed more, but I don't think he could have done that without my signature. I have no idea where my he lives now, so I couldn't even give the lender his address to chase him (although he got a mortgage on his new house, so I'm sure they could trace him that way).

If it does go to court, can the lender take my husband's assets into account? Our house and car are both in his sole name (he owned both before we married). I have no savings to speak of and my wages just cover the bills and no more, so they can't take what I don't have!

DarkConvict

On joint debts you are both fully liable to the whole amount, if they are unable to make your ex pay, cannot find your ex, or the ex went bankrupt so is not liable they will chase you for all of it. There is no joint assets or 50/50 split. The loan has 17K outstanding and they will chase anyone who is named for the money. I completely agree with the above, the only thing that matters is you signed the agreement they will win in court, no ifs or buts about it i'm afraid. As pointed out, you are over the £1,500 threshold so bankruptcy, CO, CCJs are all available to the creditor to recover the money.

So unless you can get them onto your ex, you are going to consider carefully what you do now.

What type of loan was it, could you request to see the credit agreement and hope it is not a court enforceable debt? Info on it here - https://forums.moneysavingexpert.com/discussion/2532927

Tixy

I don't think looking at unenforcability will work with it being a secured loan.

I think that you need to get professional advice, probably from national debtline, but if you cannot pay back the money and have no assets of your own then you might even need to consider bankruptcy. Personally I wouldn't go with the ignore option as for that amount of money they will track you down in the next 9years or so and would suggest the sooner its dealt with the sooner you can move on.

DVardysShadow

EHL123 wrote: »

Thanks for everyone's advice

I don't expect the lender (or the court) to take the relationship issues into account, my issue is the fact I was never made aware of the arrears or the outstanding balance after the sale, despite them having my contact details (both from my letter in 2005 and the solicitor's forms). They knew I didn't live at the property (and actually the default was issued after the property was sold, so nobody lived there). If I hadn't checked my credit file, I would have been completely in the dark about the outstanding amount until this letter arrived today, three years after the property was sold and the matter was long forgotten - as far as I knew, all the debts against the house were settled when it was sold to the builders, and I haven't thought about it since then. If I'd known the loan wouldn't be cleared, I would never have let the part-ex go ahead (the builders offered lower than market value but I agreed because it was supposed to clear all the debts, which obviously it didn't). I'm quite suprised at the solictor actually - I would have thought they'd be duty bound to state that it would still leave a debt, but I've checked and there's no mention of it in any of the paperwork or letters they sent.

The 17k also came as a suprise, as the original loan was only 12k and my ex made repayments for 18 months before he got into arrears (at £500 a month), so he'd already paid off about 9k. That means a hell of a lot of interest/charges must have been added to get it up to 17k. It made me wonder if he'd borrowed more, but I don't think he could have done that without my signature. I have no idea where my he lives now, so I couldn't even give the lender his address to chase him (although he got a mortgage on his new house, so I'm sure they could trace him that way).

If it does go to court, can the lender take my husband's assets into account? Our house and car are both in his sole name (he owned both before we married). I have no savings to speak of and my wages just cover the bills and no more, so they can't take what I don't have!

In red. None of this washes. You would have had to give consent for the sale to go ahead. You should have supervised the sale using your own solicitor if necessary. The reason I am so dismissive of this is that you have a big problem to deal with and the stuff in red just distracts focus.

In blue. Request a statement in full of the account. This will clarify what has happened. If there is a further advance, then you may have a chance to roll back some of this to your advantage

In green. They cannot touch his property. Just yours.

Ames

Did you get a financial settlement when you divorced? If so, wasn't this all taken into account then?