Can bank force me to use home sale money to clear unsecured debts in full?

[lollipop2]

Hi there.

 

I'm currently in debt with several companies, including

NatWest,

Capital One, and

Tesco Bank.

 

NatWest is my biggest creditor and I also have a mortgage with them.

 

I've been doing my own debt management plan for about 5 years so far

and am currently paying £1 a month on all of my debts due to a drop in income

(I'm currently a part-time student and do freelance work so my income varies).

 

Some of them have been passed to debt collection agencies, including the NatWest debts.

 

I'm (finally now the market is good) selling my property so I can wipe the slate clean and start again.

 

I'm going to need some of the money from the sale to put a deposit on somewhere else to live

so I won't have the full value of the debts.

 

Having spoken to NatWest, they seemed to imply they could try to force me

to use the full amount from the sale to clear my debts (which would leave me with nowhere to live).

 

They also told me I should negotiate a settlement directly with them,

even though the debt collection agents have told me I should negotiate with them.

 

 

What I'd like to know is:

1. Do I make my offer of a settlement to my creditors or the debt collectors?
   
2. Can my creditors force me to use the full amount from the sale on my debts,
   
3. or am I entitled to use it to put down on a new home?
   
4. Is there a post/guide with advice on the best approach to take when making an offer for settlement?
   
5. Am I right in my understanding that I should get somebody else to actually make the settlement payment in order to protect myself from any further action?
   

[Surfer01]

Does Natwest have a charge on the property

[dx100uk]

you shouldn't be speaking to anyone on the phone about your debts

 

the bank the sale money goes into 'could'

use it to offset the debts with them. under the offsetting rules.

 

however.

it would help us to help you

 

if you list your debts

 

and p'haps go get your credit file too

and see who owns them as well.

 

ever sent CCA requests out to check your debts are enforceable?

 

even looked at reclaiming PPI &/or PENALTY charges?

 

dx

[martin g]

Good afternoon,

 

 

I certainly would not put any money from the sale into a bank/ institution that you owe money to.

I suggest that you open an account specially for the proceeds of the sale in a bank that you are not in dispute with.

 

 

Then negotiate from a stronger position,

 

 

Martin g

[lollipop2]

Thanks for the replies. I no longer bank with NatWest (who the lion's share of my debts and my mortgage are with). There is no charge on the property, all the debts are unsecured (except obviously the mortgage). I have a bank account that is completely separate from all my creditors.

 

 

My debts are:

• NatWest: Unsecured Loan approx £20,000 - monthly payments going to debt collectors currently
  
• NatWest: Unsecured Loan approx £8000 - monthly payments going to debt collectors currently
  
• NatWest: Credit Card approx £3500
  
• NatWest: Credit card approx £3500
  
• Capital One: Credit card approx £800 - also with debt collectors
  
• Tesco Bank: Credit card approx £1500
  
• NatWest: Overdraft from closed account approx £1000
  
• Total: approx £38,300
  

I don't know if it's useful to mention so will just in case

- part of the reason I'm in such massive debt is that just before interest rates plummeted in 2008,

NatWest pressured me into taking out a remortgage with them

(I was with Northern Rock at the time and my fixed deal was about to end).

 

The sales person told me that she had inside info that interest rates were about to skyrocket even more.

I know it was gullible of me but having seen how my parents struggled in the 80's

with increasing interest rates, and already being in a position of financial difficulty,

I accepted their mortgage offer.

 

A few months later interest rates dropped massively

and it turned out I was paying about double what I would have been

had I simply left my mortgage on a variable rate.

 

I made a complaint and they refused to do anything about it

and now I'm told by the ombudsman it's too late to make a complaint as you have 8 weeks

(I think) after the bank's final response to log it with the ombudsman.

 

I did a SAR request when I did my PPI claim

(which is still in dispute because NatWest are asserting they partially refunded me

when I took out new loans but they're refusing to prove this

- I guess that's another thread).

 

Several of the accounts (credit cards I think) are missing the CCAs.

 

I was told on another thread in this forum that going down the unenforceable route

is no longer an option as it's been tested in court that banks

can simply put together a new agreement document based on the info they have on file

- is this the case?

 

I think that's all the info you need. Let me know if there's anything else.

 

Obviously part of the reason I want to negotiate a low settlement is because I need a deposit for a new home but also because Natwest screwed me over so badly with the mortgage not to mention the fact they're still trying to screw me over PPI. They also told me that because my complaint has taken so long (their fault, not mine - I began my complaint in 2010) they will no longer keep their promise to pay the interest directly to me but will use the whole refund to pay off some of my debts. Another part of the reason I have the credit card debts I do is because I used them to pay off mortgage arrears (NatWest pressured me into doing it to clear the two months' arrears - at the time my mortgage payments were £1000 a month). Looking back, I realise how gullible I was as a NatWest customer - I've been a customer of theirs since I was 4 years old and stupidly trusted them. I ended up really unwell with all of the stress and I just want to use this opportunity to wipe the slate clean and get on with my life but I don't want to end up with nothing so would really like to negotiate a reduced lump sum settlement if possible.

 

Thanks in advance for your help.

Edited August 1, 2014 by lollipop2
typo

[dx100uk]

if your redit agreemets were signed before apr 2007

 

they WILL NEED the signed agreement to goto court.

 

so, if your CCA requests were never returned..

 

either

send a new one to whom you are paying.

 

or

simply stop paying them.

 

it might be best to start a new thread for each 'debt'

in the named forum of the bank that was the original creditor

 

else its gonna get mighty confusing.

 

dx

[lollipop2]

My SAR was returned, NatWest confirmed they couldn't find all the CCAs and that whatever they could find, was in the SAR file.

 

When I was doing my PPI claim, I was told not to start lots of different threads but to keep everything to one thread...

 

All I wanted really was some general advice on negotiating a settlement, and how to handle it to ensure that they don't start chasing me for the remainder once it's settled. Are there template letters?

[dx100uk]

poss for the PPI

 

not for each debt you have issues with.

 

the bottom line is

 

if you settle

you want ALL negative data REMOVED [late/over,1,2,3 etc etc]

the default REMOVED

AND

the debt must be marked as SETTLED

not

partial settlement.

else they'll just sell the balance on.

 

if you get all ofthat in WRITING that they agree before you pay

 

job done..

 

if not

 

you might as well burn the money

as it will have been wasted.

 

dx

[sequenci]

you might as well burn the money

as it will have been wasted.

 

dx

 

I have to disagree on this one matey. Experian have confirmed that a partial settlement makes little difference to a credit score (though it can potentially have a bearing in regards to an underwriting decision on further borrowing). As such a partial/full & final settlement is akin to the same thing. It'll be nigh on impossible to remove all credit data. ALso, do consider that the vast majority of people offering full & finals have little interest in borrowing again - they just wish to clear/reduce their indebtedness.

[unclebulgaria67]

Normally when you negotiate a reduced settlement,

it is a case of saying I have no money or assets to cover the debt,

so will you accept £x amount to pay off the debt in full.

But because you have a house with equity,

then I suspect that NatWest and other creditors would check this before they agreed.

 

I think the way I would approach this, is to get on with selling the house first,

deposit any money in an account creditors cannot touch,

get settled in another house and then look to negotiate settlements.

 

Some of the creditors may ask for copies of bank statements to see what money you have

before they agreed to a settlement, so it may not be that easy to hide money away.

 

So you will have to think about this.

 

You don't want to muck around with settlements before you know how much money you would have.

If creditors agreed to settlement, but only to note partial settlement,

this may have an affect on your credit record,

which may cause problems with any credit check by the letting agent.

 

There use to be a template letter on CAG about reduced full & final settlement offers,

but the last time I looked I could not find it.

 

https://www.nationaldebtline.org/EW/factsheets/Pages/24%20EW%20Full%20and%20final%20settlement%20offers/Default.aspx

[lollipop2]

Thanks that's really helpful info.

 

With regards to the deposit for somewhere else to live,

my husband and I were looking to sell his house too

and use money from both our homes to buy somewhere new

(currently bursting at the seams in this one, it's in serious disrepair, and it's an awful area to live in).

 

Could I in the interim, rather than waiting until we've bought a new place

as that could take some time and I was hoping to have debts settled before we look to move)

 

just give him a proportion of the money to pay off of his mortgage

so I no longer have that as an asset?

 

Or I could use the money for repairs

- it is in urgent need of some serious structural repairs

and a leaking roof (ceiling collapsing in two of our upstairs rooms).

 

Or could they force me to pay it all to them?

 

I suppose it depends like you say on when I approach them to settle.

[unclebulgaria67]

Thanks that's really helpful info.

 

With regards to the deposit for somewhere else to live, my husband and I were looking to sell his house too and use money from both our homes to buy somewhere new (currently bursting at the seams in this one, it's in serious disrepair, and it's an awful area to live in). Could I in the interim, rather than waiting until we've bought a new place as that could take some time and I was hoping to have debts settled before we look to move) just give him a proportion of the money to pay off of his mortgage so I no longer have that as an asset? Or I could use the money for repairs - it is in urgent need of some serious structural repairs and a leaking roof (ceiling collapsing in two of our upstairs rooms).

 

Or could they force me to pay it all to them? I suppose it depends like you say on when I approach them to settle.

 

You are drawing people into giving you financial advice, rather than general info about the debts. This is too complicated to discuss on an internet forum. You really need to both sit down, write down your exact situation with both houses, what debts you, what finances you have to meet day to day expenses, what work is needed on the house (rough costs) etc. Then look to get some proper financial advice locally about the best way forward.

 

I would hate to think that you would plan you financial futures based on internet forum advice. I am not qualified to offer such advice and I am not sure whether others on here are.

[lollipop2]

That's not what I was asking for - I was asking where I stood in terms of the bank being able to force me to use all of the money to pay unsecured debts or not. I simply shared the additional information in case it helped. Not to worry, I got the general advice so we'll leave it there.

[unclebulgaria67]

That's not what I was asking for - I was asking where I stood in terms of the bank being able to force me to use all of the money to pay unsecured debts or not. I simply shared the additional information in case it helped. Not to worry, I got the general advice so we'll leave it there.

 

It was starting to get confusing, two houses, debts, structual repairs etc. I was worried that you were not looking at your position as a whole and weighing it all up. Giving out advice based on part information can be wrong.

 

Another point to think about. If you have a debt management plan, you will probably have signed something to say that if your financial position changed, that you would have to inform the company running the plan. If you sold the house or had other sources of money from your spouse for example, you would probably have to tell them.

 

The bank can't force you to do anything with an unsecured debt, without the authority of a court. If it has not been to court and there is no charging order, then it is up to you how you handle the house sale proceeds.

[lollipop2]

The debt management I handle directly myself with all my creditors so no signed agreement in place.

 

I guess I'll just have to wait until it sells and then try to negotiate.

 

I've spoken to National Debtline and they advised I should make it clear

that I will be a pain to deal with by going to the ombudsman about my mortgage missell

(under their discretionary powers to look at older cases) and over the PPI shambles

as well as making it clear they have already admitted no CCAs on many of my debts.

 

They said the most important thing was to 'sell' to my creditors the fact that it would be

easier, quicker, and more cost-effective, for them to take my offer than to pursue me for more.