Charge on My Parents House

[trevormax]

I have a bit of a complicated one here so I will try to explain as best I can.

 

About 10 years ago my parent bought a car on finance which I think was worth about £10k so adding the interest and whatnot it would be a bit more.

 

A few years after getting it, they hit hard times and couldn't afford to pay all of their bills. The car was repossessed and sold at auction but the amount outstanding after selling it was about £5 1/2k. The debt was later sold to a collection company and last year they were taken to court. The collection company won and were granted potential interest for 4 years on the outstanding sum. My math is good but I don't understand how they work it out, but the debt went from £5 1/2k to £27k with £180 interest to be paid each month.

 

A charge has been put on the house which they currently have a £100k interest only mortgage. The house is in negative equity right now but even if it wasn't, because of the charge, they have been told they can not re-mortgage unless they can get enough to pay it off. They have been told they can not even sell the house unless they can get enough to cover the mortgage and the charge

 

The thing is, the house is in both their names, but the debt is in my fathers name only.

 

He was recently made redundant so is on JSA and looking for work. My mother works 70+hours a week to be able to pay bills and with the £180 interest on the charge, they can not see any way of clearing the charge.

 

My question is, does anyone know any way of sorting the whole mess out? £27k for a car which wasn't even worth half that when new is horrendous and the interest on the charge is hurting causing problems with other bills, never mind actually paying any of the debt off.

 

My fathers credit file is shot to crap anyway so he will never again be able to get a loan or a mortgage. My mother is looking at ways of trying to sort out the debt but none of us are legal experts. CAB were useless and just said she has no other option but to pay the debt. Recently she has been considering stopping payments on the mortgage, letting the house get repossessed, and my father claiming bankrupcy. They are both 50 years old btw.

 

Can anyone suggest anything?

 

Thanks.

[mjc007.5]

Hi Trevormax,

 

More expert opinion and advice I am sure will follow at a more sensible hour but two pence worth for starters (in no way based on any expertise!):

 

• Was the whole process around the charging order carried out correctly? I do not begin to say that I understand this area but seems to me in most cases this is the starting point to try and sort
  
• In pursuing the first point I would think a SAR (subject access request) to one or possibly both companies (original firm and debt purchaser) are probably going to be needed.
  
• It should allow you to see charges, fees etc (It sounds like a lot of the balance could be made up of these) and the with advice from the experts on the site consider pursuing for recovery of these and other costs
  
• If the above does not work might be worth specific advice around your father disposing of his beneficial interest by selling it to your mother (I think something similar can often be possible in Bankruptcy where the debts are heavily waited to one partner). Given that the house is in negative equity at the moment this might be worth a look. It does seem quite drastic but wonder if it might then allow the charging order to be challenged more effectively?
  

Does seem complicated and this is only a friendly attempt at some constructive thoughts. The more knowledgeable will help you plot a course through this - one thing I am learning on here is that there is almost always a way to resolve these things at least partially in the direction that you want!

 

Best of luck

[IdaInFife]

something very wrong, cannot see how they are paying that much interest on a 5k debt.

 

as mjc has advised I would send a sar to whoever 'won' the charge and if differernt to the original lender.

 

Do you have a any documents from the court about the original ccj or charge?

 

Ida x

[PGH7447]

who was the car finance from, Welcome?

 

5.5k to 27k thats a 400% increase

[Tawnyowl]

Very interesting thread,few comments to make, The collection company won and were granted potential interest for 4 years on the outstanding sum. My math is good but I don't understand how they work it out, but the debt went from £5 1/2k to £27k with £180 interest to be paid each month.

COMMENT ONE--Dick Turpin at least wore a mask.As said SAR or similar.

A charge has been put on the house which they currently have a £100k interest only mortgage. The house is in negative equity right now COMMENT TWO,Is the mortgage a subprime mortgage,negative equity,painful,how much negative equity do you think there is.

The thing is, the house is in both their names, but the debt is in my fathers name only.COMMENT THREE-Charge made on house when sold or repossessed, shortfall as i read things would be large,which sooner or later they would be chased for. He was recently made redundant so is on JSA and looking for work. My mother works 70+hours a week to be able to pay bills and with the £180 interest on the charge, they can not see any way of clearing the charge.COMMENT FOUR.Father JSA at moment 50ish,mother 50ish 70 hrs plus work a week,i am full of admiraton for your mum,but worried slightly,tiredness and worry not a good mix.

My fathers credit file is shot to crap anyway so he will never again be able to get a loan or a mortgage. My mother is looking at ways of trying to sort out the debt but none of us are legal experts. COMMENT FIVE--Credit file shot to bits,50ish,i understand fully,,not legal experts ,thats why you went to CAB,who you feel werent helpful,or advice given ,kind of pay it or other option might happen,I will mention that shortly. Maybe try Free Debt Management Plans, Free IVA Debt Advice and Free Debt Help | Debt Advice | Payplan Recently she has been considering stopping payments on the mortgage, letting the house get repossessed, and my father claiming bankrupcy. They are both 50 years old btw.COMMENT FIVE-Mothers idea,considering anyway,this is how i see things that way,1-Stop paying mortgage and interest and all debts,2-Maybe 4-5-6 months house repossessed,creating shortfall you both will be chased for.During time before repossession you save money for deposit on house to rent and bankruptcy fee.You both go bankrupt,finishing the trouble and worry you are obviously going through,link to bankruptcy here- http://www.insolvency.gov.uk/ and your parents have some precious time together,just a different outlook on things.I hope you dont mind best wishes Tawnyowl.

Edited July 24, 2009 by tawnyowl

[boss lady]

Hi

Would not do anything hasty here. As above stated first obtain the Subject Data Access Reports from both the original lender and the company who now has rights to the loan. I know the law is quite often an ass but I find it hard to believe that a loan could rise to that amount and be legal.

To request the Subject Access Report letter template go to the library and copy the letter. Send all correspondence by recorded delivery. They have 40 days to send you the SAR information. What is the name of the two company sharks involved.

[trevormax]

Hi, lots of good advice from you guys, thanks for the help.

 

Think the first thing I will get them to do is send a SAR letter as suggested.

 

@ PGH7447 - I think the original company was Car Craft (their first mistake). I think it was sub-prime finance used so high interest rate. Like I said, my math is good and to arrive at the £27k figure, they would have to apply interest to the interest from the previous year. So its like year 1 say 40% of 5.5k, then year 2 is 40% of that figure etc. I am shocked something like this could be allowed to be honest. No doubt other costs were added to the final figure such as court costs and fee's.

 

@ IdaInFife - Apparently, when the charge was applied, the maximum of 8% interest on the total amount owed was applied (27,000 * 8% / 12 = £180/month)

 

@ Tawnyowl - I think it is a sub-prime mortgage. The mortgage is aroung £100k and recently houses around here have been going for about £90- 95k at most. There is 15 years left on the mortgage. I think if the house were to be re-possessed, the mortgage company would get the first dibs on whatever is made from it. If there is not enough to cover the charge, someone told me the debt would be set against my father again.

 

A debt management company would normally be a good idea, but from what my mother has told me, she has been with one and they messed up her payments on the £5.5k debt causing it to go to court in the first place. I will suggest she look into this again though or seing if they qualify for an IVA.

 

Your idea of saving the money she would have otherwise paid to the mortgage and interest on the charge is basically what my mother was thinking. For 6 months, that would amount to just over £4k. She has looked at rent prices in the area and can get a place for around £400/month (plus bills on top).

 

Considering their age and their potential combined income and monthly outgoings, unless there is some type of (reallistic) payment pland or deal that can be worked out, the repossession and bankruptcy route seems like the only way out. My parents would rather avoid bankruptcy but if your stuck in this type of situation, whats a person to do.

 

@ boss lady - indeed, I have warned my parents not to rush into anything or they could end up with even more debt. In fact I was wondering if anyone knows what will happen if the house is repossessed, and the mortgage company are unable to sell it at a price which would cover the mortgage? Would the remaining amount still be payable? This is one thing I fear could happen resulting in the charge and remaining amount on the mortgage still to pay.

[Tawnyowl]

Just thought i would answer your questions on a possible shortfall if the house was repossessed,Debt Factsheets - Mortgage Shortfalls

[Tawnyowl]

Just thought i would say my house was repossessed in november ,shortfall 30k and charging orders and debts.Went bankrupt in May,both me and my wife,moved into flat short term and have just moved into house rented,We are both in our 50s.Official receiver tells me we will poss be getting early discharge in october.And all debts gone.Not trying to influence you one way or another,just related slightly to your mum and dads worrys.Best wishes Tawnyowl.

[Tawnyowl]

You say your fathers credit file is shot ,has he any debts or is the car the only one.I dont really know if you can vary a charging order but found this,perhaps someone can advise.f your circumstances have changed since the County Court Judgment (CCJ) was issued and, for example, your income has been reduced, you may apply to the court to have your current financial situation reviewed and a variation made by completing Form N245.Im not sure on this.Tawnyowl.

[trevormax]

Thanks Tawnyowl, some good advice and info from you there. When my father was made redundant, he got a £7k redundancy package which he and my mother used to pay off a large chunk of their debts. I think at this time, they have only the charge, the mortgage and a couple other debts (around £5k worth) which they are making regular payments for.

 

From what you have described with when you went bankrupt, it seems very much like my parents situation. My mother was hoping it would just be my father going bankrupt but seeing as how there will probably be a shortfall oin the mortgage, it would seem she may have to also.

 

With the form N245 you have suggested, my fathers income has reduced from about £18/annum to £3,380 (JSA), so def worth a look I think.

[sillygirl1]

I think with filling in form N245 (or N244 to get the whole charge set aside due to various points) you are on the right tracks. It sounds like Carcraft may also have illegally repossessed the car, in which case your parents could be in for a lump sum from them - but don't hold your breath on that one. If they had paid more than 1/3 of the cars value at the time of repossession then Carcraft need to be taken back to court and hammered.