Hounded after 12 Years

[jansus]

Well I am not an expert on this but in normal circmstances I think he should not have acknowledged the debt and asked for a copy of the Credit agreement to prove they own the debt in the first place.

[postggj]

for the sake of a month

i agree

 

shot in foot me thinks

[jansus]

Increasing numbers of people who have mortgage shortfalls and other debts from as far back as the 1990s are now being threatened with court action. Last year UK banks sold off a record £7bn in unpaid consumer debts to collection agencies, which bought the liabilities for a pittance and have since been chasing them up.

As a result, Citizens Advice says that in the past few months a growing number of worried householders have been contacting its bureaus after being told to pay back debts ranging from tens to thousands of pounds which their lenders had previously let slide.

'We are seeing people who lost their homes in the 1990s who are only now being pursued for that mortgage debt,' said Peter Tutton, national debt policy officer at Citizens Advice.

Debt charities the National Debtline and the Consumer Credit Counselling Service have also both reported a sharp increase in the number of people contacting them after being pursued for debts from years ago. The number of people contacting the National Debtline about old debts has doubled in the first quarter of this year from two years ago.

'There are surprisingly large numbers of these debts which have been languishing for some time,' said a CCCS spokesman. 'We think this increase in people being chased is because of the huge growth in debt purchase.'

Another reason people are suddenly being chased for mortgage debts from the mid-1990s might also be that many of them are about to become 'statute barred', according to the CCCS. When a debt becomes statute-barred it means that the lender has no right to pursue it any longer, as long as there has been no payment toward or acknowledgment of that debt by the debtor in a legally defined period of time.

In the case of an unsecured debt - a loan or a credit card - the lender, or the collection agency that has bought the debt, has six years to pursue the debt from the last time a payment was made or, crucially, from the last time a debtor acknowledged that debt. In the case of a mortgage shortfall, the creditor has 12 years, or less in some cases.

'Creditors are realising they have to react if they don't want to fall into that statute-barred period,' says the CCCS spokesman. 'They also realise that people who ran up debts in the 1990s may now be sitting on housing wealth since property prices have gone up so much in the last few years.'

Citizens Advice cites the case of a 56-year-old disabled divorced woman who received a letter from a debt collection agency about a mortgage shortfall of just over £15,300 on a house that was repossessed in 1990. The collection company told Citizens Advice it had been unable to trace the client's former husband, who had not paid the interest on the mortgage, so were looking to her to pay the outstanding amount and interest, despite the debt being outside the 12-year time limit. She told them she was on income support and had no means of paying, but they followed up their initial letter with forms to complete. This frightened her so much that she collapsed and was taken to hospital.

If a debt is statute-barred, the lender or agency should not be able to pursue it through the courts, but many threaten to anyway, says Tutton. This has added to the confusion, with debtors contacting debt advice services about whether the debt can be legally enforced.

Last week one such debtor asked on a talkboard on website Moneysupermarket.com: 'Can anyone advise? Over the last four years I have managed to pay off a great deal of my debt which I had after my marriage break-up. I have received a letter today from a creditor chasing payment that is over seven years old. I thought I had read somewhere that if the debt was over six years it couldn't be pursued.'

Because collection agencies are chasing for such old debts, another thing Citizens Advice is seeing is people coming to its bureaus who are adamant that the debt does not belong to them. 'In some cases it might not be their debt but the emphasis is being put on the debtor to prove their innocence, not on the agency to prove otherwise,' says Tutton.

A statute-barred debt does not disappear after six or 12 years but Office of Fair Trading guidelines suggest it is unfair to pursue it if no contact has been made during that time. 'You have to ask at what point does it become unacceptable to chase a debt if a long time has passed where the creditor did nothing about it?' says Tutton.

Banks and building societies will have to do more to help customers in financial difficulties under the new banking code, which came into force last week. It also contains a commitment to responsible lending, under which banks must assess if people will be able to repay their debt before they are advanced new loans or have their credit limit increased.

What to do about an outstanding debt

 

Unsecured debts (loans, credit cards or store cards)

If the debt is older than six years and you have not acknowledged its existence or made a payment in that time, it is 'statute-barred'. Use the sample letter on the National Debtline's website (nationaldebtline.co.uk) under the 'Factsheets' section (the factsheet is called Liability for Debts) to write back to the creditor disputing that you owe the debt. If the creditor continues to press for payment for a statute-barred debt, you can complain to your local trading standards department.

Secured debts (a mortgage shortfall)

The lender has 12 years from the last ime a payment was made or the last time you acknowledged the debt to pursue you for that money. However, the Council of Mortgage Lenders has a voluntary agreement with its members that applies to properties repossessed and sold from 11 February 2000 onwards, which says that anyone who has not been contacted by their lender within six years from the date of sale will not have to pay the shortfall. If you believe the debt is unenforceable, you can use the same sample letter described above to argue this. If you believe your lender has behaved unreasonably, you should follow their complaints procedure before contacting the Financial Ombudsman Service on financial-ombudsman.org.uk or 0845 080 1800.

 

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This is older but could explain the letter