After 6 years people start to build a new life and the
demands for ‘written off’ debts are causing stress,
hardship and as an absolute minimum is ‘unfair
practice’.
What can you do?
The debt is payable under English law if under 6 years
old and ‘possibly’ payable if between 6 and 12 years
old: this does not mean that a court would enforce the
whole debt, or even part of the debt. Many homes were
sold far below market value (some sales were criminal,
and many were negligent), further, lenders added
contentious fees and interest. With the new court
initiatives (favouring pre-court resolution) lenders
would take a fearsome assault on their ‘good’ name from
the courts – Halifax BS has 50,000 debtors! Resolution
can happen in three ways:
1. Pay the debt in full on demand
2. Offer a sum in full and final settlement
3. Make no offer due to current financial commitments
and/or circumstances
1. Pay the debt in full on demand
If your circumstances allow you to settle your debt in
full and you prefer to do so, you should ask for a ‘full
and detailed’ breakdown of the debt (a fee could be
payable). When you receive the breakdown, take the
figures to your accountant for a second opinion (there
is little point in paying add-on’s and the lender is
unlikely to argue).
2. Offer a sum in full and final settlement
On receipt of the (usual) solicitor’s letter demanding
payment, request a ‘full and detailed’ breakdown of
‘every penny’ of the claim and get an accountant to
confirm the amount. Your concern at this stage is not to
argue any add-on’s, but to get the overall figure as low
as possible. When you have the lowest figure, offer 5%
and be prepared to pay 10%. Stay in control and strong
(not aggressive). Your offer is likely to be accepted on
a long overdue debt as an alternative to court
(especially since in almost every respect that the debt
was a write off some time back).
3. Make no offer due to current financial commitments
and/or circumstances
If your circumstances do not allow you to use a
solicitor, contact your local Citizens Advice Bureau or
the Consumer Credit Counselling Service on 0800 138
1111.
Do not talk to a debt agency, solicitor or a
representative of the lender on the telephone: tell them
to send letters in future. You are unlikely to be an
expert telephone negotiator, or remember the salient
points of your conversation. If you send a letter, use a
heading of ‘Without Prejudice’ this means the content of
your letter can not be used against you in court, nor
could any offer you make be considered as an acceptance
of liability.
Do not provide personal information to anyone connected
to the lender. That includes an Income and Expenditure
Statement: I have previously advised you to provide
information and full co-operation to your creditors,
however, this situation is not a standard debt scenario
and providing information is much like providing the
rope to hang yourself with.
Finally, with this type of debt the lender (or
solicitor’s) ‘bark is worse than their bite’. The
property boom of the 80’s was always going to have
casualties, the banks and building societies were always
going to make money and losses were catered for. The
resurrecting of shortfall debts is an immoral action in
many cases and you should remember that if you receive
one of their letters.
Personally, and I do mean personally, I would throw the
first letter in the bin, reply in horror at the second
letter, and use option 2 or 3 on the third contact.
Office for the Supervision of Solicitors:
8 Dormer Place, Leamington Spa CV32 5AE |
