Property repossession is distressing. If a lender does
claim a shortfall following the sale of your property
you do have options. In most situations seeking professional
advice and starting negotiations is the sensible option.
With skilful negotiation often a settlement can be reached
by paying only a fraction of the initial claim. Be careful
when acknowledging a debt however.
Threre are numerous cases where the lender has been unable
to pursue the borrower because they are ‘out of
time’. This policy changed February 11th 2000 ,the
CML initiative put forward was to limit actions against
individuals who end up owing money after their homewas
repossessed.
The law originally allowed a lender to start action to
recover cash from former borrowers up to 12 years after
their home was repossessed. The CML members agreed any
proceedings would begin within six years. Any former home-owner
who lost their house to repossession six years ago or
more and who has not been contacted by their mortgage
lender by that date will be in the clear.
The change in policy followed a report from the National
Association of Citizens Advice Bureaux (NACAB) published
in December 1999, which showed thousands of people who
lost their homes were being contacted years later with
payment demands. However complexity however can often
work in your favour, thew Limitation Act 1980 also mcomes
into play. Any lenders costs in addition to the defaulted
loan / mortgage agreement must be reasonable. All settlement
figures are paid on the understanding that it is in full
and final settlement of the debt.
MIG (Higher Lending Charge) - The insurance that
doesn't insure you
HLC is controversial - policies are issued to protect
the lender and not the borrower. If there is an amount
outstanding after the property is repossessed then the
MIG insurer will compensate the lender – not the
borrower. Even though you have paid for the insurance,
the lender is the only one that benefits. The HLC/MIG
insurer will pursue you, the borrower, for the shortfall
(known as 'The right of subrogation').
If the borrower has evidence, from the lender or his agents,
stating that the policy is for the borrower’s benefit
and that the borrower may not be left with a debt following
repossession, then he / she may well succeed in arguing
that they should not have to cover the shortfall.
Click here for clear and impartial debt advice.
.gif){kind=spacer}
