Help needed - charges against house

silvercar

From what you have posted could it be that no interest was paid before the date of the charge in 2001?

So they got repossessed in 1991, nothing happened until 2001 when West Brom came chasing their debt. This would be logical as they would have 12 years to get acknowledgement on a secured debt. So in 2001 the debt gets acknowledged. Interest from 1991 ie 10 years on the original £3,000 debt plus maybe repo and legal charges has ballooned the debt considerably.

At this point West Brom go for a charge on the property and start charging interest that is paid at £80 per month. At 10% interest, that would represent a charge of £9,600.

Not saying this is the true story, but would explain the £80 monthly interest and why the charge was put on in 2001 for a repossession in 1991.

trudie15

Yes Silvercar you're right spoke with my Dad and thats right.

Does this mean the £85000 is the correct amount? This has knocked my Dad as he was expecting that worst case scenario would be £20000.

What sort of offer would they expect.

Should he still see a solicitor.

Thanks for all your help, it really is appreciated.

maninthestreet

So exactly what interest rate has been charged on this £3000 debt? If it can be shown it is exhorbitant, the debt can be struck off, or significantly reduced by a court. I believe there was a similar case in the last couple of years that set a legal precedent.

silvercar

silvercar wrote: »

From what you have posted could it be that no interest was paid before the date of the charge in 2001?

So they got repossessed in 1991, nothing happened until 2001 when West Brom came chasing their debt. This would be logical as they would have 12 years to get acknowledgement on a secured debt. So in 2001 the debt gets acknowledged. Interest from 1991 ie 10 years on the original £3,000 debt plus maybe repo and legal charges has ballooned the debt considerably.

At this point West Brom go for a charge on the property and start charging interest that is paid at £80 per month. At 10% interest, that would represent a charge of £9,600.

Not saying this is the true story, but would explain the £80 monthly interest and why the charge was put on in 2001 for a repossession in 1991.

If this is right, as Trudie has now confirmed, then that would imply a charge of about £10k in 2001. It may be that the West Brom agreed to a payment of £80 because that was what your parents said they could afford and that didn't represent the total interest payment but a contribution towards it. So interest has been added since 2001 even though some payments have been made.

You really need to get a statement from West Brom showing the size of the debt, the £80 payments and where they have gone.

The Council of Mortgage Lenders have agreed not to chase unacknowledged debts over 6 years old (as opposed to the statutory 12 years). I don't know when this ruling came in, but if it was before 2001 then they shouldn't have chased this at all!

Finding out the size of the debt when the chrage was put on the property in 2001 is the first step. I'm sure that they don't actually expect to get £85,000. That would be a starting point for their negotiation. It may be that you need to keep complaining and end up taking this to the FOS for a ruling.

Bossyboots

"The six year limit only refers to beginning recovery action and does not affect a lender's ability to recover the shortfall debt over a longer period. "

The above is taken from the Council of Mortgage Lenders FAQs. From reading that website, it seems that the lender only had to contact the debtor asking for repayment within the six year period to nullify the voluntary agreement not to pursue debts after that time.

silvercar

So the lender would need proof that they had made contact before 1997 or thereabouts; if they can't do that then shouldn't have gone to court in 2001 to secure the debt on the new property.

PayDay

Wouldn't the lender have had up to 11 February 2000 to make contact (phone call/letter)?

http://www.cml.org.uk/cml/consumers/guides/debt

"Does this time limit apply to every case?

The new time limit does not affect anyone who is already -

• adhering to alternative payment arrangements for the shortfall debt;
• or who has already been contacted by the lender, even if the initial contact was made with them by the lender after six years from the date of the sale of the property in possession."

silvercar

In addition, from 11 February 2000, lenders who are members of the Council of Mortgage Lenders have agreed voluntarily that they will begin all recovery action for the shortfall within the first six years following the sale of a property in possession. Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender about recovering any outstanding debt will not now be asked to pay the shortfall.

From your link.

SO if trudie's dad wasn't contacted prior to 11 Feb 2000, they shouldn't have been made to pay a penny more. If they were contacted then the arrngements put in place at the time and presumably the £80 per month agreed since the charge was put on the property apply.

The lender should be able to tell you if they did make contact. It could be that they did make contact and everything is in order. In which case you need a break down of the figures and proceed from there.

It could be that no contact was made and the charge on the current property shouldn't have been made. It may be that the debt was sold on, and Trudie's dad was hoodwinked into agreeing the current arrangements.