statute-barred debts

Malco

Please can anyone help me? I was unfortunate to have lost my home in the last mortgage crash and my home was reprosessed December 1996. The lender has now issued court proceeding against me to recover the outstanding debt. This is the first time i have heard from them since they evicted me in 96. I beleive the statute-bared rule for mortgages is 12 years and i am curently at 11 years and 6 months. What can i do? I have never recieved anything from them ever!!! i have never admited the debt.

GeorgeUK

Have you received documents from the court itself, or just something from the lender?

The house was reposessed in December 96, but when was the last payment made to the mortgage?

I would not advise making any payment or writing acknowledging the debt until others have been able to advise.

Malco

I have received court papers with a very poor description of a claim. The last payment or communication with them would have been the repossession hearing about a month before we were evicted. I have not made any payment or acknowledged the debt at all.

AGB863

Yes

who is the mortgage lender? As I believe that a number of the leading lenders had a voluntary aggreement to use the 6 years time limit.

Some one else may be able to confirm who they are

malestrom07

The Council of Mortgage Lenders and the Financial Ombudsman Service acknowledge that there 12 years to recover a shortfall in the legislation - however they take the view that 6 years is more than adequate and helped me in my case. The lender withdrew their claim. I would speak to the FOS for their opinion. It worked for me.

fermi

AGB863 wrote: »

who is the mortgage lender? As I believe that a number of the leading lenders had a voluntary aggreement to use the 6 years time limit.

I thought it was all CML members. EDIT: malestrom07 posted while I was formatting that quote.

Read through the factsheet linked to below (only a extract is quoted by me later).

I would talk to National Debtline to discuss this as well. There are a lot of these old mortgage shortfalls being chased at the moment.

Link: Factsheet | Mortgage Shortfalls

The Financial Services Authority rules

From 31 October 2004 the Financial Services Authority (FSA) has taken over the regulation of mortgage lending and problems with existing mortgages.

The Mortgage: Conduct of Business Rules say that a lender "must deal fairly with any customer who has a mortgage shortfall debt". If the lender decides to take action to recover the shortfall they must make sure you are told about this in writing, within six years of the date of sale of the house. If the lender does not do this, you can complain to the Financial Ombudsman Service.

INFORMATION
Contact details for The Financial Ombudsman are listed under the 'Useful addresses' section at the end of this fact sheet.

Council of Mortgage Lenders policy

The Council of Mortgage Lenders (CML) has a policy on the collection of mortgage shortfalls which should be followed by their members as a point of good practice.
From 11 February 2000 the CML says anyone whose property was repossessed and sold and who has not been contacted by their lender within six years from the date of sale will not be asked to pay the shortfall.

WARNING
The lender may argue that if they can prove they tried to contact you that this counts as 'contact', even if you did not receive the letter.

Under the CML policy, if your lender contacted you before 11 February 2000 then it appears that they can continue to try to recover the shortfall even if your house was repossessed and sold more than six years ago. If this applies to you then you could try arguing that it is unfair for the lender to keep trying to recover the money if your house was sold over six years ago.

Point out that they have limited the recovery period for new cases and have a 'commitment to fair and sympathetic treatment for people for whom possession cannot be avoided'.

What should I do?

Work out when you last paid or acknowledged the debt and when the house was sold. If this was over 12 years ago you can use sample letter M5 and argue that the debt is unenforceable under the Limitation Act 1980.

Check if your mortgage lender is a member of the CML.

If they did not contact you before 11 February 2000 and it is six years or more since the house was sold without any contact from your lender, you can argue the CML policy with your lender. Use sample letter M4.

Has your lender sent you a letter within six years of the sale confirming that there is a mortgage shortfall and that they intend to recover the debt?

If you did not receive this letter you may be able to complain to the Financial Ombudsman Service. Ask your lender for a copy of their complaints policy and follow this first.

ADVICE
Options for dealing with a mortgage shortfall are complicated. You may need to contact us to discuss which option may apply to you in your situation.

Malco

The Lender is now RBS as it was The Leeds who the Halifax bought out an subsequently RBS joined in.

What concerns me is how i respond to the court papers. I don’t want to open dialogue because is could jeopardise my chances in it being statute-barred i really have no idea what to do next as i do not want to ignore it but equally i do not want to possibly damage my prospects moving forward.

malestrom07

Excellent answer Fermi, as usual I'm rushing around and don't get time to refer to the right resources. Good Luck Malco

fermi

Malco wrote: »

What concerns me is how i respond to the court papers.

The first thing I would do is give National Debtline a call free on 0808 808 4000. Tell us what they say.

There are a lot of these shortfalls being chased at the moment, so I hope that they should be able to tell you the best way to approach this considering that you have had a claim issued against you.

Malco

You have all been a great help. I am going to call the National Debtline and will post a response shortly when i have spoken to them. Again thankyou all for your help. If you have any more sugestions please keep them coming as it all helps not least the support.