Mortgage shortfall - coming up six years ago!

pondering_life

Hi. Hoping someone will clear this up a bit for me or tell me I've been given the best advice.

I'll keep it as short as I can coz it is rather complicated...

My ex and I took out a joint mortgage in 2006. We split in 2007. Gave the house up for voluntary repossession. The debt we owed was in three separate lumps. The mortgage, a secured loan and an unsecured loan. While they were selling the house, my ex and I agreed to pay £50 each, monthly to cover the unsecured part of the debt. I only did this for about 4 months. I suffered a personal bereavement and to be honest - couldn't be bothered with the hassle from my ex.

The last contact I made with Northern Rock was September 2008.

There were rumours in 2011 that my ex went bankrupt but I have no idea if this is true or not. He isn't on the public register but he may have acquired a Tomlin Order as bankruptcy would have affected his job.

I have now (almost but not quite), 6 years down the line received a letter from Mackenzie Hall saying that they would like to speak to me in regards to a mortgage shortfall totaling just over £40,000.

I have spoken to citizens advice yesterday. He said that because this is quite an old debt, it would be classed as a "non priority" debt as they would be unable to evict me (I'm now renting from a housing association). He also said that LEGALLY they can chase me for 12 years for this mortgage shortfall but it is an unwritten rule that they normally would only chase it for six years.

I have some options now...
1) Ring them up and arrange a payment plan direct, which would involve me paying back £300 for the next 25 years.
2) Get and IVA
3) Go bankrupt
4) Do nothing unless a serious threat for a CCJ arrives.

The citizens advice advisor suggested that this may well be Mackenzie Hall just trying their luck to see if I would pay up. If I wanted to I could ignore them til I hit the 6 year with no contact line. Which would involve putting up with these letters for the next 2-3 month. And then hopefully they would stop. On the other hand if they go ahead and take out a CCJ against me I would be obliged to pay the full £40,000.

So really I'm left in a game of chicken. Do I try and out wait them? Will they really stop trying to pursue me in a few month when it hits the 6 year deadline? Or will I have to hide for another six years? Or do I just grab the bull by the horns and go for the IVA now?

I'm inclined to try and out wait them as this way it buys some time to save money in cash and at least I have a chance of not paying it. Either way, I suppose I'm more than likely going to end up with an IVA?

Anyone got a spare £40,000? Hahaha

longtermplanner

The CAB advisor has given good advice. Legally the debt isn't statute barred for 12 years. MH may be just trying it on, but they may not.

In your situation I can't imagine why you would go for an IVA, with no assets to protect and a secure tenancy bankruptcy is a much better option. I also can't imagine why you would choose a pyment plan for that much debt, not a sensible option.

Why not try ignoring them for a while? If they get a CCJ or carry on pestering, go for bankruptcy.

pondering_life

Thanks for replying longtermplanner!

I was thinking bankruptcy myself til I spoke to the citizens advice. He said that because I have £300 surplus each month the bankruptcy would last for 3 years instead of the usual 12 months. Also, I work in a government building which could cause a bit of trouble if I went bankrupt.

I am planning on ignoring them until if/when a serious CCJ threat arrives. I just wanted confirmation really that citizens advice had given me valid info.

Thanks again

fermi

Worth reading if you have not already.

---> https://www.nationaldebtline.org/EW/factsheets/Pages/11%20EW%20Mortgage%20shortfalls/Default.aspx

pondering_life

Thanks fermi!

This is along the lines of what I had researched before I spoke to CAB. But he was of the opinion that it was unlikely that they would pursue me over the 6 year mark as this is an "unwritten rule".

Plus I have no idea if the £40,000 is all the mortgage with interest added on or if it includes the secured loan and unsecured loan. Obviously, I can't contact them to find out which it is without interrupting the 6 year no contact thing.

So, realistically, will they pursue me for 6 years or 12 years? Everything I've read suggests 12 years. CAB said more than likely only 6 years.