Northern Rock underhand or illegal? We can't get on with our lives

mistalee

Hi

Sorry if this is long but it needs to be to understand the situation.

In 2003 I was declared bankrupt after a failed business venture. My dream restaurant didnt last long and in the process I lost my car, house, everything!

I was however able to get a local government housing association to purchase the house from northern rock so we could still live in it by means of renting. This seemed a great option, which would cause less stress and upheaval with having 3 young children at the time.

The sale of our house was carried out purely between the housing association and northern rock, we had no part in it. We were given info eventually from the association that the sale was completed and that we were to start paying them rent instead of the mortgage to northern rock.

We never did recieve any communication from northern rock after this. After a couple of years we were getting standard letters from northern rock informing us of a rate change in our mortgage. I would call each time and ask why and explained we had no mortgage with them anymore. They seemed sympathetic and assured me the letters would stop. They didnt stop, and as my credit report still had the mortgage money outstanding (stopping me from getting even a basic bank account) i called them several times to ask they take the info off my report as i didnt owe them anything. They agreed and assured me they would do that.

However, early in 2008 after another call to them, the revelation came that I was still owe them £28k due to a shortfall in the sale of the house back in 2003!!!

This £28k includes all the interest that has accrued since then whilst we knew nothing about it! After much wrangling and solicitor involvement, they agreed I owe them nothing. But as my wifes name was also on the mortgage she was to be held responsible for the outstanding full amount! My wife doesnt work (housewife with 3 kiddies) So although i am not responsible now for the debt, they are aware that it is me that is paying back the £160 per month, which barely covers the interest!

How legal is all this? Should they be allowed to include all those years of interest when they didnt even tell us we owed them anything? And isn't it illegal for me to be paying this money back since my discharge in 2006?

silvercar

Once the property is sold (or repossessed) the debt becomes unsecured. Any shortfall is included in your bankruptcy. As your wife didn't go bankrupt she is now the only one liable for what was a joint debt.

You are now paying for your wife's debt that was once a joint debt, but that is because as a family you have decided to be the sole earner. Its not illegal.

You could try and offer a full and final payment - you may be pleasantly surprised what small percentage they will settle for. If you made the case that you can no longer afford to contribute to your wife's debt and she has no income, they may be prepared to accept a low payment to settle.

mistalee

Thanks
The main problem is the interest accrued throughout the few years they didnt tell us about it.

What in your opinion would be a reasonable percentage to offer, even bordering on a "cheeky" offer? Would 30% be a good starting point or would you suggest going in lower/higher?

dancingfairy

O.K so the wife owes the debt but how come it took them 5 years to let her know and no paperwork was ever received by the couple - that doesn't sound right to me. I would want to get the paperwork checked out relating to the sale and raise a complaint with NR that no correspondence was received for 5 years while presumably charges were being added. I think the debt should be written off if you have genuine reason to believe that no charges were outstanding - obviously any evidence would be good - solicitors letters, letters from housing association, etc.
It might also be worth a complaint to the ombudsman.
I'm all for paying what you owe but this sounds ludicrous.
df

SouthCoast

Information on mortgage shortfalls from National Debtline:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls

silvercar

They often chase years later, either because they want to make sure the debt gets acknowledged before its time barred or because there is little point chasing soon after repossession because it is fairly obvious you were in a financial mess at that time or you wouldn't be repossessed.

Thanks
The main problem is the interest accrued throughout the few years they didnt tell us about it.

What in your opinion would be a reasonable percentage to offer, even bordering on a "cheeky" offer? Would 30% be a good starting point or would you suggest going in lower/higher?

You can search on the official land registry website to find that the price the house sold for and see what the shortfall was.

Your wife should approach them, mentioning that she was not made aware of the interest acrueing and that she is not working and her other half is no longer willing to pay her monthly amounts, then making a third party offer ie she has someone (you!) who will help her out to clear the debt as a final settlement. She would also want it marked "settled" on her credit record.

I would think 20% may be a good starting point, given she is not working.

mistalee

Thanks for the advise and info guys.

You're right, given the fact we knew nothing of this, 5 years of interest has accrued which we could have avoided had we known from day 1, and the fact my wife doesnt work, I would imagine it would put us in a better position to negotiate a lower settlement fee.

We would have paid alot more per month until now, but as my credit rating is poor because of the bankruptcy, my new mortgage company (we did eventually get one 2 years ago) had no choice but charge us a much higher APR which of course drained our funds.

I think we might go in with an offer and see how that goes before contacting the ombudsman. We'll get this monkey off our backs somehow! Do you think a personal letter or a solicitor letter would be the way to go with that?

Thanks again everyone!

JCS1

If you're looking at doing a full and final offer, then I think there is a template on the DFW board for the wording to be used. You need them to agree to update credit file too.

mistalee

JCS1 wrote: »

If you're looking at doing a full and final offer, then I think there is a template on the DFW board for the wording to be used. You need them to agree to update credit file too.

Thanks, what is the DFW board?

Falze

Its anothe board on the forum called Debt Free Wannabe.

Best of luck

IF

Hi mistalee, hope this helps.

Full and final settlement lettter:-

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Best wishes
If...x