Secured loan

minimoto

Good afternoon

Your assistance required.

A friend has let me know they are in 4 years arrears with a secured loan on their property, no payments made since April 2012. The company now start legal proceedings to resposess the property.

I have offered to help, starting with going to the debt charity the company explained maybe able to help. But they have said they don't deal with secured debt and passed her to someone else.

Equity release was mentioned but she has a partner who is younger living in the property so it can't be done while they're there because of age.

The parter is the cause of the issue and is a drug addict, she is trying to make him leave, but until he does its stalemate.

The debt charity suggested making temporary payments until a resolution is found and she can afford £50 per month (I think the standard payment is around £350) but the company won't accept this with out proof equity release is going ahead and are maintaining the action will continue.

What are her options, should she make the £50 she can afford payments and continue to try get rid of the cause.

She's so depressed I think she would rather loose the house then it would force him to go.

I should also say this is a mortgage free property (inherited) and she is currently on benefits with a grandchild who she has custody of which I would assume she will loose after the proceeds of the repossession come her way.

sourcrates

Hi,

I`m not sure how a charging order would effect the equity release process to be honest.

Making token payments wont stop legal action, usually a creditor will proceed regardless.

minimoto

Ok I didn't realise that they have told her they are just going to repossess the house. Obviously to intimidate her.

It's £17000 give or take and equity release when resolved will pay this off completely.

The debt charity said temporary payments would stop the proceedings which you think isn't the case?

I assume court costs will be added to the outstanding amount if it went that far?

minimoto

Sorry mistype it's £27000

sourcrates

As no payments have been made in 4 years, I would expect the creditors patience will be wearing thin by now, and they will be wanting to exercise there rights in court.


She could try making token payments, it may suspend action, it may not.


Sorry, in my post above I was incorrect, they can go for a possession order as the loan is secured, I was assuming it was a standard unsecured loan for some reason, my apologies.

bargainbetty

If the house is solely in her name, she can easily apply for an restraining order against the partner to get him out of the house. If he has an active drug habit, then getting him away from the child is a priority.


To be honest, if he has an active drug problem then she might be able to get him out via police order because of the child anyway. Got to be worth a try.


If the partner has no legal claim on the house, I don't see why equity release would be a problem.

minimoto

The house was inherited so deeds are in sole name but the loan is in both names, he persuaded her to do it for home improvements. He was working at the time, her not.

It's prescription drugs so police have been involved previously when he's had aggressive episodes but he's been taken away then released when they're out of his system. I will suggest the injunction.

minimoto

the advisor re. Equity release said both people in the property have to be over 55 to consider.

I assume as it wouldn't be liable to be sold until both have passed away.

National_Debtline

Hi

If this loan was originally taken out as a secured loan it will be dealt with using a process similar to a mortgage with arrears rather than a CCJ with a charging order.

If the lender applies to court for a possession hearing it is possible that court could adjourn to allow time for the equity release option to be attempted. In most possession cases the court would need to see that the contractual payments can be maintained and the arrears cleared within the outstanding term, but they have discretion based on the case.

It can be a complicated area so you’re welcome to telephone National Debtline to discuss the situation. I recommend that you telephone an advice agency called Shelter at some point as they specialise in housing laws. Telephone Shelter on 0808 800 4444.

James
@natdebtline

fatbelly

You really need to talk to a specialist on the equity release question. I have found AgeUK helpful. I see no reason why there should not be a plan in sole name if the house is solely owned, provided the owner is 55+ and it's accepted that should the owner die first the other party would have no right to remain there.

Regarding the impending court case, a judge would look at the whole picture. If there was no prospect of the contractual payment being made, but an equity release application in progress, they may be willing to adjourn for a short time (28 or 56 days but I did get a 90-day adjournment once).

They could suspend a possession order on payment of contractual monthly instalment plus something to the arrears, with the 'something' clearing the arrears within the remaining term, but that does not seem to be an option here.

Another possibility would be a Time Order under s129 of the Consumer Credit Act as the secured loan would be covered bt the CCA not AJA. National Debtline have a factsheet here but they are tricky to get through and the proposal must be 'just'

https://www.nationaldebtline.org/EW/factsheets/Pages/timeorders/securedloansandmortgages.aspx

Failing all this the result would be a 28-day possession order. You do not have to leave when this expires as the claimant must then get a warrant of eviction.

However, the best way forward here may be equity release.

minimoto

Thankyou for the comprehensive replies I will show her in the morning it's very much appreciated and I will report back.