mortgage shortfall debt

[knight007]

My ex wife and I owned a house which was reposesed during the divorce. This resulted in a mortgage shortfall of around 13k. I managed to talk the lender into reducing my liability to 50% of the balance since the property was jointly owned. When I asked about how to go about paying it off, they wrote to me and said that they use a debt collection agency for this.

 

About 6 -9 months passed and finally the debt collection agency wrote to me asking for 6,500. I made an offer to give them £1450.00. They wrote to me today and said they would accept no less than £2,000 by lump sum or monthly payments capped at £3,500.

 

Is it worth re-negotiating and trying to bring them down to around £1,700? Or will they stick to £2000?

 

Secondly, in the letter there is a paragraph which I don't understand. It says:

 

"Please note the balance shown of £6000 does not take into account any full and final or limited liability agreements. A balance under any agreement made is available upon request".

 

Please can someone explain in laymans terms what this means.

[Lea_HTH]

Do you have the acceptance of 50% liability in writing?

 

Joint loans are usually jointly and severally liable - i.e. both people are jointly responsible for paying off the whole. This means, even if you have paid what you consider to be your share, they can still come after you for your ex's share...and they will if he/she doesn't have any money.

 

The phrase 'full and final' refers to agreements for any payment made to be in full and final settlement of the entire account - they cash a cheque sent with this written on it and the entire debt is discharged. But their letter is clearly indicating that any payment you make is not in relation to a 'full and final settlement'. In addition, they quite clearly state the sum referred to does not take into account any 'limited liability agreements'...and your agreement to pay 50% with the bank is precisely that, a limited liability agreement, limiting your liability from the whole to a percentage.

 

My view is that they are hoping you will make payment and will then continue to chase you for more until they are satisfied they have enough. You need to be careful that any payment you make is in full and final settlement of the account - if it's not, then you will need to consider carefully what you intend to do, bearing in mind the above comments.

[knight007]

Yes I have a previous letter from the mortgage provider stating 'we are happy to limit in respect of this mortgage shortfall to your personal liability to £6000'.

 

I should have stated the full text in the letter from the debt collection agency. The beginning of the letter states:

'Unfortunatley we are unable to accept the offer made and would expect a payment in the region of £2000 lump sum as full and final settlement, or monthly installments capped to £3500 subject to review'.

 

And then it mentions the bit about liability as I have stated at the start of this thread:

'"Please note the balance shown of £6000 does not take into account any Full and final or limited liability agreements. A balance under any agreement made is available upon request".'

[Lea_HTH]

In that case, since you have confirmation of that limit of liability (keep that letter safe and secure!) then feel free to enter into further negotiations with them about discharging your side of the debt. It is natural for debt collection agencies to push you to pay as much as possible, that's why the letter is coached as it is, implying if you don't pay the 2k, they'll let you pay 3.5k by instalments, but won't indicate that this discharges the whole debt.

 

You could try sending them a cheque, with 'full and final settlement' written on it, attached to a letter indicating it is your final offer to discharge the debt in full and final settlement, and wait and see if they cash it. Often these companies open letters, separate cheques out for banking and do so before the right person has even seen the letter! Worth a try - the worst that can happen is they send the cheque back and say 'no'.