12 Year rule?

greenspun.com : LUSENET : Repossession : One Thread

My repo left a 30k defecit in the 80's recession. I received (8 yrs ago) a statement asking for the balance along with a form asking for my earnings etc.

This letter scared the sh*t out of me and I ignored it. I was living in a rented house at the time and couldn't believe they had tracked me down after all that time. Anyhow, rightly or wrongly I ignored the letter along with any others and to date have made no contact with the lender. If I remember correctly, one of the letters mentioned interest charges that blew the whole thing way out of my reach which drove me even further underground.

I've moved again (still renting) and haven't heard anything for about 2 yrs. This whole thing is ruling my life right now (and has done since that letter 8 yrs ago). I'm too scared to go on the elctoral role, too scared to apply for a credit card or anything else that might require a credit reference.

I've got to stop this as I'm not getting any younger and can't go on living in rented houses for the rest of my life.

I'd give my right arm for a mortgage right now but I'm too scared that if I try to get one it will all come out and not only will I not get that mortgage but also the debt collectors will undeniably have me cornered and screw me over.

I saw in a previous post something about a "12-year rule" - could that possibly be my saving grace here?

If I apply for a mortgage right now what will likely happen?

I appreciate I have an outstanding debt here but I'm trying to find a 'realistic' way out of this situation.

Any help/tips/advice GREATLY appreciated.

-- Rue (rue@nowhere.co.uk), May 19, 2002

Answers

Rue, there are two 'realistic' ways out of this: you can carry on as you are for another 4 years or else you can take a deep breath and contact the lender in preparation for making them an offer. Given the shaky-looking property market, if it were me, I'd sit quietly in my rented home and save a deposit for 4 years' time when prices are lower, but you need to weigh it up and decide for yourself. Good luck,

-- Melody (mbc109@york.ac.uk), May 20, 2002.

Rue,

You said that you received a statement asking for the balance 8 years ago, but what date was your property actually repossessed on?

Mark.

-- M Amos (idgroms@hotmail.com), May 20, 2002.


Beleive me you have absolutley nothing to worry about.All lenders nopw have to conform to the Mortgage code of practice,this states that no debts will be pursued after 6 years by members.They are all members.I regularly get mortgages for clients that were repossessed in the 80s and later.I will bet there is no money judgement order,if there is not then they have sqat.It unenforceable and they all know it.Get a solicitor to write to them on your behalf so as not to reveal your where abouts and ask for sight of the MJO, the sale price etc etc.It will cost 20/30 quid but will give you peace of mind.Be fare if they could extract their 30k they would have done it by now ,wouldn't they?

-- roger watts (rwatts.homeloans@virgin.net), May 20, 2002.

I am a little perturbed with the answer roger gave if this was the the case according to his philosophy then we would not have a site like this are you real roger ?

-- mario (mariothegooner@hotmail.com), May 20, 2002.

"...but what date was your property actually repossessed on?"

If i had to guess I'd say 1986-1987. It was approx. 6-months after the property boom where house prices peaked. Oh, the reposession was voluntary (if that makes any real difference).

-- Rue (iamrue@hotmail.com), May 20, 2002.



Melody, re. "you can carry on as you are for another 4 years "

Please could you explain the significance of a further 4 years?

One thing I think you are saying is there will *possibly* be another housing price crash?

-- Rue (iamrue@hotmail.com), May 20, 2002.


Roger - they are not all members and do not have to conform to any code which is voluntary.

-- Too scared to say (iwasduped@yahoo.com), May 20, 2002.

I should add that I am being harassed for an 11 year old repo, and the Lender's agents Evershaft's will not back off. I know of other cases where the same Lender is using Evershaft's to follow up on repo's that are way over six years old. I would rather not say who the Lender is so that they don't figure out who I am, but Lee and a few others on this site I trust,know the details. I have it in writing from them that they do not subscribe to any code of practice set out by the CML and are not bound by them in any way.

-- Too scared to say (iwasduped@yahoo.com), May 20, 2002.

Same as for us - my fiance's debt is 10 year's old and Hammonds, Suddards and Edge are still after him - that is why you need to wait until 12 years expires as I do believe the more you have for them to take the more they are likely to come after you, i.e. if you own property, etc.

-- Chris (chris@anon.co.uk), May 21, 2002.

Puzzling all the more then - I have no money, am a student (I have to re-train in a new profession because of them) and have four kids. Yet they are determined to give me a nervous breakdown. Not my ex you understand, despite knowing where he is...full-time job, house girlfriend. Just me and the kids. Nice one Evershite's.

*****************THRP is not responsible for MY views******************

-- Too scared to say (iwasduped@yahoo.com), May 21, 2002.



Rue,

I think you need to be sure of the following:

a) Date of repossession

b) Date of sale of property

c) Date of Money Judgement Order, if there was one.

As I understand it still hasn't been decided (legally) whether a 6 or 12 year limit applies for mortgage shortfall or when this limit runs from. It may run from the date of first default on the mortgage, or from a,b,c, above. If anyone knows any better, I'm all ears. The Limitation Act 1980 states "An action upon a specialty shall not be brought after the expiration of 12 years from the date on which the cause of action accrued".

Incidentally, my property was repossessed nearly 10 years ago and ,I too, am still being harassed. Where Roger got his idea from I really don't know.

Mark.

-- M Amos (idgroms@hotmail.com), May 21, 2002.


HI, ALL LENDERS CAN CHASE YOU FOR 12 YEARS AFTER THE LAST DATE YOU EITHER PAID THEM SOME MONEY OR YOU CONTACTED THEM BY LETTER. IF YOU ARE WITHIN THE 12 YEAR PERIOD AND YOU CONTACT THE LENDER OR ANYONE ACTING ON THERE BEHALF YOUR BUGGERED AS THE DEBT AND TIME SCALE STARTS ALL OVER AGAIN. THERE IS A DEBATE WHETHER ONCE THE HOUSE HAS BEEN SOLD WHETHER THE DEBT BECOMES A SIMPLE DEBT OR IS STILL A SPECIALTY DEBT. THE DIFFERANCE IS A SIMPLE CONTRACT/DEBT IS BASED ON MONEY BUT A SPECIALTY CONTRACT/DEBT IS BASED ON PROPERTY/LAND. THE LAW IS VERY UNSURE ON THIS. IF YOUR DEBT IS DATED FROM 1999 OR BEFORE AND YOU HAVE HAD NO CONTACT WITH ANY CREDITOR YOURSELF DO AS ONE OF THE OTHER REPLIES SAID, CONTACT A SOLICITOR TO MAKE IT LOOK GOOD AND ASK THE SOLICITOR TO DISPUTE THE DEBT ON THE GROUNDS THE DEBT IS IN CONFLICT WITH THE LIMITATIONS ACT OF 1980 (OR SOMETHING LIKE THAT). ALL THE BEST G.C. (OH, I AM CURRENTLY GOING TO COURT AS MY DEBT IS 9 YEARS OLD. IM THROWING EVERYTHING AT THE CREDITOR AND IF YOUR READING THIS MR CURTIS ID CHECK WITH THE R.S.A. TO SEE IF THEY WANT TO CARRY ON WITH MY CASE AS IM MORE THAN HAPPY TO GO ALL THE WAY JUST TO PROVE THE CASE.)

-- gary cross (gary.cross@wynnster.co.uk), May 21, 2002.

This has been taken from the Council of Mortgage Lenders Site:

In addition, from 11 February 2000, lenders who are members of the Council of Mortgage Lenders have agreed voluntarily that they will begin all recovery action for the shortfall within the first six years following the sale of a property in possession. Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender about recovering any outstanding debt will not now be asked to pay the shortfall. The Association of British Insurers supports this approach on behalf of the mortgage indemnity insurers.

Does this time limit apply to every case?

The new time limit does not affect anyone who is already -

adhering to alternative payment arrangements for the shortfall debt; or

who has already been contacted by the lender, even if the initial contact was made with them by the lender after six years from the date of the sale of the property in possession. The six year limit only refers to beginning recovery action and does not affect a lender's ability to recover the shortfall debt over a longer period. If there is evidence of mortgage fraud, the new time limit will not apply.

Mark.

-- M Amos (idgroms@hotmail.com), May 21, 2002.


Gary, this 12 years from last contact thing is a misnomer. Specialty debts have a 12 year shelf life - period. The time clock starts when the money due can be collected from the debtor - i.e. from the date of the default or the repossession, which ever happens first. That is legislated for in the Limitations Act which has not been overturned by any Court case to date. Where the longer time limit applies is in the situation where a Money Judgement Order has been obtained at the eleventh hour - such as 11 years into the 12 year period. Then and only then can another 6 years (not 12) be tacked on. So far, I know of no case where this has actually happened.

-- Too scared to say (iwasduped@yahoo.com), May 21, 2002.

I'm still a bit unsure of where I stand here....

To clarify my situation a little where it seems perhaps more relevant:

My 1st contact from the lender was to explain that although there was insurance in place to cover reposession/shortfall the debt was still owed. As I said before this letter was received about 8yrs ago.

The initial shortfall in mortgage re-payments and/or (voluntary) reposession would have been 12yrs+ to date.

Some of the (scarey) correspondence was from debt collectors (not sure when exactly - I was/still am running scared) within the past 3yrs.

I have not responded at ANY time to any attempt at communication. This has sometimes driven me to near paranoia on occasion, e.g. not answering 'caller withheld/number unavailable' calls, NEVER completing any form with credit reference mentioned amongst numerous other things - at least I've been consistent (if not dumb!).

----------------------------

The exact points I would like to clarify are:

1. Does the 12yr 'rule' solely rely upon the lender/debtor 'attempting' contact, whether or not I responsed, in which case I am still screwed?

2. Does a 12yr clock start ticking from the issue date of a MJO?

3. Is it 'safe' for me to ask a solicitor(?) to request information on any MJO held against me?

--------------------------

Apologies in advance for the long post.

Rue

-- Rue (iamrue@hotmail.com), May 21, 2002.



I am trying to get my head round this whole thorny question of the Limitations Act and the rights or otherwise of Lenders to pursue shortfall claims beyond six years. As far as I can make out from the various postings and the numerous articles and legal stuff I have read, the position is currently the following: 1) The 1980 Limitations Act sets an absolute 6 or 12 year deadline for commencing proceedings for recovering either a simple debt or specialty debt respectively. 2) Proceedings means court action to recover the debt, not writing letters to repossessed borrowers. 3) No definitive court ruling has yet been given on whether or not Mortgage Shortfalls are specialty or simple debts. 4) No definitive court ruling has yet been given on whether or not monies claimed as a result of MIG payouts are specialty or simple debts. 5) No definitive court ruling has yet been given on whether or not waiting years to commence recovery action is contrary to civil rights accorded to us by the Human Riaghts Act 1998. 6) The Council of Mortgage Lenders has agreed a voluntary code of practice not to begin recovery action for shortfall claims beyond six years after the sale of the property. This may mean that the CML has been advised by lawyers that they risk losing a case on the question of simple v specialty debt for mortgage shortfalls, otherwise why would they bother? 7) The CML claims that the six year period starts from the moment the shortfall can be quantified absolutely, in their terms this is the sale date of the property. 8) The Limitations Act sets the starting point at the time where the loss can be reasonably identified. In realistic terms this would in most cases be much earlier, since the lender will already be aware of the likely selling price of a repossessed property even before repossession and will thus know if a loss is likely.

It seems to me that what needs to happen in order for clarity to be brought to the situation, is for a sound legal opinion to be sought from a top property rights barrister, and depending on that advice, a test case or class action be brought arguing that Mortgage Shortfall is a simple debt and as such claims are statute barred after six years unless COURT proceedings have been started.

I am personally willing to contribute to a Home-Repo.org fund to pay for legal advice on this question and would also be willing to contribute to a fighting fund to bring a test case. With appeals to civil rights organisations and others perhaps enough money could be raised to clarify the existing law in this area.

-- Gordon Bennet (arsenewhinger@hotmail.com), May 22, 2002.


there are three cases coming up at the court of appeal on the 22 and 23 of july 2002 correct me anybody if these dates are not exact. all these cases are to do with the 12 year rule etc. if these judges have the bottle to change the law in our favour then well it speaks for itself. my lawyer is not too convinced this will happen but then lawyers can be a bit negative sometimes

-- mario (mariothegooner@hotmail.com), May 22, 2002.

MR GORDON BENNET. All you say above sounds about right as far as i can see. The problem is if someone has a debt of say 40,000 or less they have no reason to go to court. This is due to the facts relating to the kind of settlement you should be able to agree. This is normally around 10% of the debt. I myself am in the middle of a case. My solicitor asked for the claim to be set aside through the courts but the first judge found against me which my solicitor found hard to understand. We have now taken advise from a barrister who feels i am in the right. we have now asked to have the debt set aside again. The main problem is this case will cost me 5,000 + and if i loose i have to pay all the costs. I think you can now see why no one has gone to court. The creditors will just pull out of the case if it looks like it going against them also. I have spent 1,000 just to get to the setting aside stage. Also if i loose i have the whole debt of 15,000 to pay in my case. If people are willing to cover my costS and the possibility of me having to pay the debt i would take it all the way. I do not think this will happen though, do you. Regards g.c.

-- gary cross (gary.cross@wynnster.co.uk), May 22, 2002.

Dear Gary, Thanks for your reply. I personally would be willing to put 100 into a fighting fund for someone, such as yourself, to take forward a test case that might establish clearly some of the points I set out in mt posting above. I don't know how many people are reading this site daily in similar situations to us, but if fifty are prepared to do the same then we can cover 5000 of costs. It would be useful to know what the basis of your defence is and have a few more details of the claim against you to see how general your situation is.

-- Gordon Bennet (arsenewhinger@hotmail.com), May 24, 2002.

Mario, Can you give more details about these cases you mention?

-- Gordon Bennet (arsenewhinger@hotmail.com), May 24, 2002.

They were tracked down. and asked for huge sums - in one case over 350,000 - to cover past arrears, interest, repossession and sale costs, insurance and negative equity.

Last week the Court of Appeal decided lenders had chosen the wrong starting date for the 12 year "limitation" period. It found for the Wilkinsons, a Norfolk couple, and against the West Bromwich.

Lenders had always counted the 12 years from the day the property was sold - even if this was long after the repossession. But the new ruling says the 12-year clock starts ticking from the date the borrower first fell into arrears. "The gap between the two can be many years," says solicitor Stephen Murrell of Staple Inn Partnership in London's Chancery Lane, who helped research the case. "The way is now open for legal help for thousands of borrowers who are, or who are liable to be, pursued for arrears outstanding when their homes were repossessed. The judgment has a general application. Banks and building societies will either have to drop debt chasing or return money they have already taken."

In October 1988, Mark and Lynne Wilkinson borrowed 34,895 from West Bromwich Building Society to buy a house in Norfolk, paying 484 a month. In January 1989, the couple hit hard times and fell into arrears.

In late July 1989, the West Bromwich repossessed. By now the Wilkinsons' debt had jumped to 43,648.

In November 1990, the West Bromwich sold the house for 34,000. It then claimed the Wilkinsons owed more than 57,000 - leaving 23,921 after the sale proceeds. The society also claimed 8% annual interest.

The Wilkinsons, who had no money, found a new home. They put their debt nightmare to the back of their minds. Their peace was shattered in November 2002 - 12 years less two days after their former home was sold - when the West Bromwich tracked them down and demanded the 23,921, plus interest and costs. The couple approached the Diss and District Citizens Advice for help.

Then they went to court, arguing the 12 years should start from the date of the ar rears, not from the house sale date. "They lost in the county court. There were at least 15 other similar cases which were found in favour of the banks," says barrister Nigel Meares, a property and land law expert.

"But they were given the right to appeal so there must have been some doubts," says Meares, who acted for the Wilkinsons on a no-win, no-fee basis.

"We had to accept the period to recover a mortgage debt was 12 years - last year's Bristol & West vs Bartlett case decided that. So it all revolved around when those 12 years kicked off - in legal parlance 'when the right to receive money' started," he says.

Meares cited the 1833 limitation act, an 1882 appeal court case, a 1894 case, a 1980 law, and several other legal precedents.

And all three appeal judges agreed with him. "More than 12 years had expired for the date of arrears. The society could not recover the shortfall," the court said.

Lenders have yet to decide how to react to the decision. The Council of Mortgage Lenders said: "We are still considering the ruling. We will be discussing it further with the West Bromwich Building Society and with the rest of our members before deciding whether or not we think it has any wider implications for the industry."

"We do not believe it is right to make any comment," said West Bromwich.

-- (BLUEFIELDSUK@YAHOO.COM), December 13, 2004.


Moderation questions? read the FAQ