Household Mortgage Corporation - What is a Full and Final Settlement?

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In 1999 HMC accepted an offer of 7200 in "full and final settlement" of my shortfall liability. This is to be paid in 100 monthly instalments, beginning February 1999 and ending January 2005. They reserved the right to pursue for the full debt in the event that I failed to make the payments.

The payments have now been maintained for 3 years.

In February 2002, they used their "solicitors" Davis & Co to write offering me a "full and final settlment" of 12,232!!

A solicitor has now told me that the debt is never cleared and they can always write asking for more. In this case, why are they using the phrase "full and final settlement", and indicating that they give up their rights to pursue for the whole debt?

Does anybody have any idea what is going on?

ajs feb 2002

-- avril smith (av@totalise.co.uk), March 15, 2002

Answers

Unfortunately, the "full and final" settlement is not necessarily final. I can't remember the details of this but the way the law interprets it is that the lender/lawyer is accepting a reduced settlement because it is not possible to get a final settlement and therefore they have the right to come back for more later.

There is a work around for this, which I think is to get a Deed of Satisfaction. But I need to learn more about these so I'm hoping somebody else will add more detail here.

I suspect you can also prevent future claims by wording your settlement offer to say that this offer is being made because the lender is refusing to prove the alleged claim and that it is unwilling to admit that it missold a MIG (if there was one involved). But I am speculating here.

Now, all this raises a question for people who have already settled, which is "will I be chased again?"

The answer is: we don't know. Most people I know of who have made a lump sum settlement have not been chased again.

However, I have several cases of people who settled with lenders (mainly Halifax and I think Mortgage Corporation, now called First Active) where the lender had claimed on an RSA (Royal & Sun Alliance) MIG. And RSA is chasing them for more.

For people whose MIG turns out to have been with RSA (serve a SARN on the lender to find out), investigation of the problems with full and final settlements is particularly important. They probably need about Deeds of Satisfaction.

There's a separate but related issue here, which is that I know of many cases where people agree to pay a certain amount per month in settlement. In almost all of these, the lender/lawyer asks the person to fill in a new income and expenditure forms every year or just asks for higher monthly payments. This is why I encourage no- one to make monthly payment offers.

Lee

-- Lee (repossession@home-repo.org), March 16, 2002.


Avril - you need a new solicitor for a start, yours is not only a misinformed plonker, but is scaring you with his advice. You might want to check your other posting [the extract] with your new representative. If you have the previous "full & final" arrangement in writing, your Lender (through Davis & Co) cannot renege on it. Indeed Davis Diddle and Co can be censured for harassment (a legal slap on the wrists they will of course ignore). I suspect you made an arrangement verbally, which, unfortunately, is impossible to prove and they will ignore any previous arrangement. In essence you have to start all over again in your negotiations, but slap both your Lender and Diddle & Co with a SARN pronto.

-- Too scared to say (iwasduped@yahoo.com), March 15, 2002.

Many thanks for the replies.

Some more facts:

I was sold a MIG; HMC have always said they are pursuing the debt on behalf of the insurers (who they refuse to name of course).

I have a document from HMC saying that they accept my offer in full and final settlement of my liability, and they only reserve the right to pursue the full debt in the event of my not maintaining the agreement.

Citizen's Advice Bureau and Money Advice Bureau advised me on this matter, they told me to make a full and final settlement offer, and also when I received the acceptance letter from HMC they told me that it wasn't a trick.

I'm thinking now of writing to HMC to ask them what was meant by that solicitors letter asking for another 12K in full and final settlement, because if they intend asking for more money, then I shall certainly stop paying the monthly payments immediately. Is this a good idea?

What is a SARN?

TIA

avril

-- avril smith (av@totalise.co.uk), March 18, 2002.


p.s. I forgot to say that HMC went to court over this in 1994/5 and got a "summary judgement" for 56k against me and the other person involved who had done a runner.

avril

-- avril smith (av@totalise.co.uk), March 18, 2002.


Hi Avril, The way your 'full and final' settlement reads to me, is that until Jan 2005 your settlement will not be full and final. to be F & F you would have needed to make the full payment agreed with HMC.But to write to you and ask for another 12K is rediculous. Iwould write to them and ask why they have gone back on their Original Agreement.Maybe they were hoping that by now you would have defaulted on your payments and would have been able to claim the full amount

Goodluck, Daren

-- Daren Otsay (darenotsay@blueyonder.co.uk), March 18, 2002.



I reproduce in full the text of the letter from HMC.

date: 20 January 1999.

Dear Madam

Ref here:

We write with reference to the above matter and further to your letter dated 22 December 1998.

We would advise that the Company accepts your offer in full and final settlement of 7,200.00 to be paid monthly by 100.00 commencing from 1 February 1999, in respect of your liability only.

Please find enclosed a Standing Order Mandate, which needs to be completed and sent to your bank. The first payment under the standing order is due on the 1 March 1999 and monthly thereafter.

The first payment is due on 1 February 1999, however, as the Standing order will not be set up in time for the first payment, please therefore arrange to forward a cheque for this.

We would advise, that if payments are not maintained, we reserve the right to pursue yourself for the full outstanding debt, but trust this will not be necessary.

Yours faithfully, Louise Lacey Legal Administrator

------------------ end letter --------

The summary judgement, which I defended pointlessly, was against me and PAUL MICHAEL HARDIMAN, who is the b******d who ran off and caused the repossession in the first place. I assume that where the letter says "your liability only" they are referring to their separate rights against Hardiman.

I do thank everyone who is replying, for their comments, and support. This thing is a nightmare which has blighted my life for 11 years. Being one of the early casualties of the 1989 boom and bust Tory policies has been very difficult, because of the lack of advice and support available. I have been misadvised by Housing Rights and Citizen's Advice Bureau. The Citizen's Advice Bureau in Abingdon, Oxon, refused to help me because I wouldn't fill in an Income and Expenditure Form. They didn't bother to tell me though, they just wrote to HMC saying that they weren't advising me.

avril

-- avril smith (av@totalise.co.uk), March 18, 2002.


Avril - this isn't a Full & Final agreement as far as my experience of these letters go. Your arrangement was only with the HMC - in respect of your liability - but what they don't say (and is implicit once you know how they play this game) is that if your ex either defaults on his arrangement or never pays, or the Insurer exercises Rights of Subrogation, which they have, they [the Lender] can come after you for the whole amount all over again. This is the worst case of being sneaky b******* I have ever read on here. I am so very sorry, and angry for you. Read this site from top to bottom and follow the steps starting with a SARN, (Subject Access Rights Notice) which will give you all their paperwork on this, comments, internal memeo's the lot. I would refuse to be budged on this. Based on the information you have provided, HMC deliberately misled you. The Summary Judgement Order for 56k is legally enforceable against you. Disgusting.

-- Too scared to say (iwasduped@yahoo.com), March 18, 2002.

To clarify something else...they don't have "separate" rights against your ex. You are both jointly and severally liable, which means his actions are your actions etc and will always impact upon you with respect to this debt. My ex (no kids with him,paid no child support, went bankrupt on me) has never been contacted or paid a bean - they have always known where he was. Yet they are still after me 11 years later. I even got a friend to give them full details of his job, where he lives, his brand new car (oh yes indeedy) and....nothing.

-- Too scared to say (iwasduped@yahoo.com), March 18, 2002.

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