Cabot Financial for old mortgage shortfall

jemz

First time posting about this so be kind please as I’m not sure what to do. 

Back story: December 2007 I bought my first house, I was 22 and had no savings but the bank happily accepted the 5% discount from the vendors as a ‘vendor paid deposit’ 
this was right before the big housing crash (obviously didn’t see that coming and naively thought you could never lose money on a house!)
I eventually sold the house for a loss and moved away to be near family. This was 10 years later and I was now a single parent. I had a few letters through about paying the shortfall but ignored them and then nothing more for about 3 years until last week when I got a letter from Cabot saying they had bought the debt. 

I am in no position to be able to pay the nearly £22k balance, I can barely keep my house warm. Any repayments I could offer would be about £10 a month and I can’t see that they’ll accept that as it would never be paid off. I am working but only part time as I have no childcare so work around school hours. My car is on finance but will be paid off in September. I’m in social housing. My car is the only thing of any value and that’s probably only worth about £2k. 

I don’t want to go to court or get a CCJ, I’m trying to set up my own business at the moment to get out of this situation, if it succeeds I’d be able to pay them off but not for a couple years at least. 

Right now I’ve got nothing and I have to admit I’m worried. 

sourcrates

Mortgage shortfall debts are rarely pursued very vigorously, usually due to the fact they are asking for a large amount of money, not many folk have 22k under their mattress do they.

I assume you are renting now, and your budget is tight, so my advice would be to write back to Cabot stating you are unable to make any kind of payment just now due to your other essential financial commitments (shortfall debts are non priority debt).

Include a copy of your budget, make it show that you have no disposable income, don`t worry, they can`t check up on you, nor are you obliged to comment further.

Cabot will most likely put your account on the back burner, and you may not even hear from them again, however if you need further advice, feel free to post again.

SusieT

Edit, I am an idiot and cannot add up, so please ignore this
Just a thought, but could you be more specific about that actual dates?   I have a feeling that with a mortgage shortfall they need to take court action within 12 years of the deby arising. 
 

jemz

sourcrates said:

Mortgage shortfall debts are rarely pursued very vigorously, usually due to the fact they are asking for a large amount of money, not many folk have 22k under their mattress do they.

I assume you are renting now, and your budget is tight, so my advice would be to write back to Cabot stating you are unable to make any kind of payment just now due to your other essential financial commitments (shortfall debts are non priority debt).

Include a copy of your budget, make it show that you have no disposable income, don`t worry, they can`t check up on you, nor are you obliged to comment further.

Cabot will most likely put your account on the back burner, and you may not even hear from them again, however if you need further advice, feel free to post again.

Thank you, I’d be happy if I found £2 under the mattress let alone £22k! 

Yes I’m now renting in social housing as a single parent and working part time. When I bought the house I was young, single and care free and had no idea that the market was about to collapse. 

Surely they can’t just ignore the debt as I can’t afford to pay? 

jemz

SusieT said:

Just a thought, but could you be more specific about that actual dates?   I have a feeling that with a mortgage shortfall they need to take court action within 12 years of the deby arising. IF I am reading this correctly, you purchased the house in 2007, sold it about 10 years later say 2017, you ignored letters (so would not have acknowledged the debt in any way?), then nothing more for  "about 3 years"  which from the above dates would have been 2020 or 2021?? but last week you get a letter saying it is with Cabot. 
@sourcrates assuming the dates work out, could this be one that they let slip through the net by not acting quickly enough, and thus not possible now to take court action?

Thank you. I thought the time limits for debts didn’t apply to mortgages? 

I bought in December 2007, sold approx mid 2017 and was then contacted by Moorcroft who I ignored. I did write a handwritten letter to the bank around this time but never heard a reply from them. I don’t remember the content unfortunately. Their letters stopped approx mid/late 2018. Since then I’ve not spoken/written to anyone and assumed that the lack of letters was due to the pandemic. Then last week a letter from Cabot saying they had bought the debt from the bank. 
Im not sure I understand the bit you wrote about 12 years from the debt arising? Surely the debt arises at the point the house was sold? I just wish that they’d warned me house prices were about to collapse when I bought it! 

fatbelly

Your situation means there is nothing they can do against you. If they try applying pressure, you just go bankrupt. In fact it sounds like you would almost qualify for a DRO.

I don't think either are needed as you have nothing at present that you need relief from.

If the 'cause of action' was 2017 then this goes statute barred in 2029, provided you do not acknowledge the debt by payment or in writing, which is why I would not write.

I once settled a case like yours for 4p in the £. The client did not want to go bankrupt as it would have had an effect on a new business, but she did have a few thousand to offer. It was a bigger shortfall. 22k is quite small for these debts.

jemz

fatbelly said:

Your situation means there is nothing they can do against you. If they try applying pressure, you just go bankrupt. In fact it sounds like you would almost qualify for a DRO.

I don't think either are needed as you have nothing at present that you need relief from.

If the 'cause of action' was 2017 then this goes statute barred in 2029, provided you do not acknowledge the debt by payment or in writing, which is why I would not write.

I once settled a case like yours for 4p in the £. The client did not want to go bankrupt as it would have had an effect on a new business, but she did have a few thousand to offer. It was a bigger shortfall. 22k is quite small for these debts.

Thanks for your comment. This forum is giving me hope! I can’t go bankrupt due to my job but the DRO is interesting. 

I’d like to set up my own business and at the moment I’m in the very early research stages but from reading up on the DRO I wouldn’t be able to do this. 

If I could settle it for 4p in the pound that would be great, I could borrow that from family and pay it off but I can’t imagine they’d accept that. 

fatbelly

Your strategy for the past five years has been fine. One letter from a debt buyer (who probably paid next to nothing for this) should not change things.

There are many reasons why you should concentrate on building an emergency/fighting fund - even the £10 a month you mentioned earlier is better than nothing.

Don't borrow money to repay debt!

sourcrates

jemz said:

sourcrates said:

Mortgage shortfall debts are rarely pursued very vigorously, usually due to the fact they are asking for a large amount of money, not many folk have 22k under their mattress do they.

I assume you are renting now, and your budget is tight, so my advice would be to write back to Cabot stating you are unable to make any kind of payment just now due to your other essential financial commitments (shortfall debts are non priority debt).

Include a copy of your budget, make it show that you have no disposable income, don`t worry, they can`t check up on you, nor are you obliged to comment further.

Cabot will most likely put your account on the back burner, and you may not even hear from them again, however if you need further advice, feel free to post again.

Surely they can’t just ignore the debt as I can’t afford to pay? 

That`s exactly what they do, yes.

They buy these debts cheap, this one maybe cost them a few grand, what they would lose on this deal, they will make up on another, its all a game of chance with these things, as I said before, not many people these days have that sort of money to hand, they roll the dice and take there chances, that`s how the debt purchasing game works.

You may not want to go bankrupt, but they won`t know that, you use whatever you can against them to aid your situation, they bluff you, you bluff back, its all a game, that`s what it boils down to, who blinks first.

The entire debt collection industry is based on a similar strategy, if only people realised this, it would take away the fear of the unknown.

jemz

This forum has been incredibly helpful so thank you. 

The letter says they are prepared to offer a discount in order to make a full and final settlement so should I ask what the discount is? 

Should I write to them? Email them? Call them or ignore them? They’ve included an expenses form to fill out and send back. I’ve filled it out but not sent it yet

fatbelly

They are trying to find out what they can go for, and get you to acknowledge the debt. My suggestion is that you don't do that.

Filling out an expenses form can be considered to be an acknowledgement. When the time comes you can tell them what they need to know rather than what they want to know.

Try to save that emergency/fighting fund I suggested earlier and then you tell them what you're proposing if you want to change strategy and try that.

In the case I suggested earlier I think the client had enough to make an 8% offer so I started at 4% and to my slight surprise they accepted straight away. But I only offer that as an example. Every case is different.