Secured loan being written off

Scottkr_2

I've received a letter this morning from Everyday Loans regarding a loan we took out in 2007. When we enquired, we were told not to worry about me not starting a new job in a few days and my wife being paid £250 per month as a salary but earning £2000-5000 as commission.

The firm my wife worked for went bust and we ended up losing our house, owing the mortgage company about £26,000 and then Everyday loans about £42,000. Neither company has bothered sending debt collectors or letters to get the money back off us. 

I'm not asking for judgement as obviously, if we had the money then we would have paid it. But I am left wondering why Everyday Loans has decided to write to us and say that this debt will be shown as settled on our credit reports.

Any ideas?

[Deleted User]

I imagine they've given up hope of you paying it and are tidying up their accounting, rather than carrying forward a credit which will never happen.

I would be very surprised if the debts will show as settled on your reports though - did they not default many years ago?

sourcrates

These type of debts are commonly referred too as "mortgage or 2nd mortgage shortfall debts".

They can occur when a house is repossessed and sold for less than the outstanding balance on the account.
Once the house is sold, any shortfall just becomes your typical unsecured, non priority debt, as the collateral for it was sold.

They tend to be quite a lot of money most of the time, as in your case, 60k/70k is not unusual.
These companies are well aware than the majority of folk, won`t have that kind of money to hand, and any payment plan would have to be arranged according to affordability, which in reality may be only a few £££`s per month, so a debt of this size, may not be re-payable within your lifetime.

Some companies may be happy with a trickle of payments on a regular basis, others take a commercial view and take the decision to just clear the decks, as they see no benefit in selling the debt on.

fatbelly

They also realise that pressurising someone who is now by definition not a property owner for a large amount of money can easily result in them applying for bankruptcy and then they get nothing.

It's why we often see these debts get settled for really small amounts like 5p in the £