Mortgage Shortfall Help

A21

They've done it once before many years ago when I was in arrears just before property got repossessed and the agent was rude and intimidating when I said I would not sit down with them hence I am worried they will follow through again. If they had not sold the property for such a deficit and continued to rent I wouldn't have such a huge shortfall, the arrears were almost paid off at the time. It's stressful not knowing which way is best to proceed without knowing anyone who has been through similar.  

sourcrates

Mortgage shortfall debts are usually not chased very hard.

When this happened to me, I had a shortfall of around £86,000, my liability went into an IVA, my ex-wife's liability though was still for the whole amount, at the time she wasn`t working due to injury, so could not afford to make any payments, the solicitor wrote every six months for a year or two, then the letters stopped, and we heard no more about it, this was 2007.

These types of debts tend to be quite large sums of money, and most lenders take a pragmatic view, that because an individual has had their property repossessed, they won`t be in a great financial position, so won`t have access to that kind of money, therefore there is little point in heavy handed collection activity, so they will happily take a monthly amount at a rate you can afford.

Usually this means the debt will never be fully re-paid, but if you cannot afford anything, they are just as likely to write the whole lot off, as chase you for £1 a week, it doesn't make commercial sense you see.

A21

Thank you for sharing this. Do you mind me asking how you went about the IVA and what that meant for you? Are you still paying it off or has your debt been settled?

sourcrates

A21 said:

Thank you for sharing this. Do you mind me asking how you went about the IVA and what that meant for you? Are you still paying it off or has your debt been settled?

This was over ten years ago now, all done, dusted and ancient history, I was quite uninitiated back then, I chose an IVA, but as I had no assets to protect, what I should have done was go bankrupt.

All debt solutions with the exception of bankruptcy, are organised by the debt charities (see my signature) there are lots of private debt management companies out there as well, who charge silly fee`s, and should be avoided.

If push comes to shove for you, I would not recommend an IVA, unless you had a house to protect, the bankruptcy option is much easier, far simpler, and not that invasive these days, plus it only lasts a year, IVA`s can trudge on for up to 6 or even 7 years sometimes.

As I said, if things get serious, that would be my advice, unless, or until that happens, I'd just keep treading water, if you can`t afford to pay, then tell them so.

A21

Thanks, Bankruptcy seems so daunting and from what I read seems a bit invasive, I don't have any assets other than my car but you are right would only be 12 months. 

A21

Hi has anyone successfully managed to wipe off or renegotiate a big mortgage shortfall debt (over 40k) without an IVA or bankruptcy? Or anyone have experience of ignoring letters chasing shortfall and the consequences of doing so long term? Thanks in advance.

fatbelly

I once settled a big shortfall debt at something like 5 pence in the pound (can't remember the details now but did post about it at the time)

A21

fatbelly said:

I once settled a big shortfall debt at something like 5 pence in the pound (can't remember the details now but did post about it at the time)

Thanks for the reply, any idea where you posted or what the discussion title was? 

sourcrates

A21 said:

Hi has anyone successfully managed to wipe off or renegotiate a big mortgage shortfall debt (over 40k) without an IVA or bankruptcy? Or anyone have experience of ignoring letters chasing shortfall and the consequences of doing so long term? Thanks in advance.

I did mention that my liability went into an IVA, my wife was also liable, she couldn`t pay, so the debt was written off in the end.

Seems silly I know, but a £500 credit card debt will be chased more vigorously than a 40k mortgage shortfall debt is, they may posture a lot, but in reality, if you don`t have the money, or any assets they can potentially take, then there is very little they can do to you.

A21

sourcrates said:

A21 said:

Hi has anyone successfully managed to wipe off or renegotiate a big mortgage shortfall debt (over 40k) without an IVA or bankruptcy? Or anyone have experience of ignoring letters chasing shortfall and the consequences of doing so long term? Thanks in advance.

I did mention that my liability went into an IVA, my wife was also liable, she couldn`t pay, so the debt was written off in the end.

Seems silly I know, but a £500 credit card debt will be chased more vigorously than a 40k mortgage shortfall debt is, they may posture a lot, but in reality, if you don`t have the money, or any assets they can potentially take, then there is very little they can do to you.

Sorry I didn't mean to seem like your advice wasn't useful. I just wondered if someone else also has some experience. How long did it take before they left your wife alone?