Full and Final Settlement Help

J_haines25 · 12 May 2018 at 8:22PM

Hi

Looking for a bit of advice dealing with a mortgage shortfall. When my partner was 19 him and a friend took out a joint mortgage on a house. Long story short they lost it and it was reposessed. This left them with £75000 mortgage shortfall. Flash forward 10 years and the debt has now been passed to Moorcroft (currently sitting at £67000). I have heard some pretty awful things about them but they are working on behalf of Lloyds. They have not bought over the debt.

The most my partner could pay is £200 a month and this would take 28 years to clear. We are investigating the option of a full and final. I have some savings and my mum is willing to loan us some money. I could also take out a loan if needed. We think we could probably afford about 25% of the overall debt. Does this sound a reasonable amount? Has anybody had any experiences with final settlements?

Any advice would be amazing.

Thanks Jo

sourcrates · 12 May 2018 at 8:39PM

Hi,

You are correct in that Moorcroft do not buy debts, they just manage them.

If you make an offer to settle, they will have to refer back to their client (Lloyd!!!8217;s), for a decision.

I dont like the idea of further borrowing to settle this debt, that makes no sense to me, I assume Lloyd;s are no longer charging interest, so why take out a loan where you will pay interest ?

Do you know if the shortfall consists of capital or interest, or a mixture of both ?

J_haines25 · 12 May 2018 at 8:46PM

Hi

Hopefully we wouldnt have to borrow more through a loan if the amount we have saved would be enough. My mum has offered the money as a gift but I would want to pay her back.
I think there was some interest applied initially but its been a long time since any interest has been added. Its mostly capital and various legal fees etc from when the house was reposessed.

sourcrates · 12 May 2018 at 8:55PM

Well in that case you may as well try your luck.

You must have good reason why it would be to their advantage to take your offer, 28 years of payments is a non starter.

If the offer gets refused, would Bankruptcy be an option to clear the debt once and for all ?

J_haines25 · 12 May 2018 at 9:00PM

I'd rather avoid bankruptcy if possible which is why we are looking at this first.
I'm hoping that the fact that it would take so long to claim back the debt might be a good enough reason for them to accept it but unsure if it would be.
We have thought about it if its refused. We had also thought about a trust deed (we are in Scotland) but not sure if this would even be possible because of the type of debt.

fatbelly · 12 May 2018 at 9:41PM

J_haines25 wrote: »

Hi

Hopefully we wouldnt have to borrow more through a loan if the amount we have saved would be enough.

Offer half of what you have saved (to give yourself some room to negotiate)

I have known mortgage shortfall debts settled below 10% because they are generally large debts, people are generally in rented accommodation with nothing left to lose and often go bankrupt with the lender receiving nothing.

There's a useful factsheet with links to standard letters here:

https://www.nationaldebtline.org/EW/factsheets/Pages/mortgage-shortfalls/mortgage-debt.aspx

[Deleted User] · 13 May 2018 at 7:21AM

Yes we had a similar situation and paid about 20%

We were able to get another mortgage and have a fresh start recently

Offer what you can and tell them you are considering bankruptcy as it is not realistic

Also how old is the debt and has it been being paid regularly or has it just reappeared

[Deleted User] · 13 May 2018 at 7:22AM

Start with a very low offer if you decide to make one

J_haines25 · 13 May 2018 at 11:51AM

He lost the house about ten years ago and initially he couldonly afford £50 a month. This was then increased to £100 about 5 years ago and he has been paying that ever since.
By the looks of things the other guy who he had the mortgage with hasnt paid anything towards it.
Did they clear the remainder of your debt for 20%?

J_haines25 · 14 May 2018 at 11:15AM

Also I was wondering if anyone knows if the final settlement was accepted how this would impact the other person he took the mortgage out with?
Would they still approach him for the remaining amount?

thanks

Full and Final Settlement Help

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