Shortfall after repossesion West Bromwich Building Society

[Thefatman]

Hi All

 

My mum and dads house was repossessed in 1991. The mortgage was with West Bromwich Building Society.

 

After sale there was a shortfall or around £18k

 

Until about 3 years ago my dad was making token payments of £10 per month. But his financial situation has changed and he can no longer afford it.

 

He has submitted to them a full income and expenditure, has explained that he has no assets whatsoever. Lives in rented accommodation, works part time and his earnings are topped up by Tax Credits and Rent Benefit.

 

They demanded £25 per month which he can not afford.

 

I submitted a SAR for him and have received all the paperwork relating to the opening of the account and the sale of the repossessed property.

 

We know that there was a mortgage indemnity guarantee on the property from Eagle Star although there is no mention of this in the documents returned. As is there no statement of any sort.

 

My dad has asked them to bankrupt him as he has no way of paying them back. Instead they are threatening legal action with an attachment to earnings order should they win in court. He is 63 years old. There is no way on earth is he going to work long enough to pay this back in any way shape or form.

 

He is 63 working part time suffering from COPD and my mum is disabled. I really do not know what West Bromwich hope to achieve here.

 

I have attached a copy of their latest letter. ANy advice would be gratefully received. I fear this is going to put my dad in an early grave.

 

 

[ATTACH=CONFIG]60408[/ATTACH][ATTACH=CONFIG]60409[/ATTACH]

[Ell-enn]

Hi there, do you have any paperwork relating to the mortgage indemnity guarantee ?

[Thefatman]

Hi there, do you have any paperwork relating to the mortgage indemnity guarantee ?

 

Hi Ell-enn, no nothing at all. When they first starting chasing for the shortfall about 20 years ago, they told my Dad that it had been paid off by Eagle Star but they had a legal obligation to try and recover the payment for Eagle Star.

[Ell-enn]

OK, so they've admitted the shortfall has been paid off by the guarantee? Surely it would be Eagle Star's job to chase the money. However, your dad isn't in a position to pay anything so even if they do take him to court they can't get what he hasn't got and given his health problems I believe a judge would be sympathetic.

[Thefatman]

Thanks Ell-enn. Shall we try writing to them one last time reiterating the situation ? As I said we did invite them to bankrupt him, but their response was " Then we'll never get our money " but they will never get their money anyway as he can not give them what he does not have.

[Ell-enn]

They're just being difficult in the hope they frighten you enough to either borrow the money or get it from relatives. Stick to your guns, if your dad hasn't got the money what can they do ?

 

Anyway, you don't owe them - you owe Eagle Star .... do they have an agreement to collect the money on behalf of ES?

[Thefatman]

Thank you Ell-enn your support is appreciated

[Ruleoflaw]

"We know that there was a mortgage indemnity guarantee on the property from Eagle Star although there is no mention of this in the documents returned. As is there no statement of any sort."

 

 

1991 mortgage/ agent/ guarantor

 

 

What type of mortgage? Why was there a shortfall? If the bank concealed terms, made a mistake, or committed a fraud, during the contract then the statute of limitations does not apply to the normal 12 year claims period affecting land or transfers (ie mortgages). This means claims from 1991 in these circumstances could still be made. If this were true based on your parents' facts then your parents should not be liable. If the mortgage by either the bank or its agent were illegal in the form of contract then a contract would be said to have been/ be illegal. If the contract is illegal then there are no liabilities for relationships of guarantees, ie the guarantor is removed of any liability. The relationship of guarantee is based on the concept that the contract is legal and legally enforceable. So if there has been a fraud etc as there was no contract (by illegal transaction) there is no liability for the guarantor. The guarantor is essentially a third party but not a third party to the contract. Demand copies of the entire transactions under SAR. The bank must first prove the debts are legal for any other to liable.

 

 

Repossession:

 

 

Was there an abuse of process or was it oppressive? You may have a claim against the bank for what could have been an illegal repossession.

 

 

Contract

For contract to be binding all main clauses (significant contract terms) must form part of the same contract. So when you sign one main document but no mention of a clause in it, you have only made an agreement (contract) for those terms and are thus liable. So, where a separate document is supposed to be part of the main contract it must be, what is called, an incorporation (assumed part of the contract) of terms. If there is no incorporation, the clause is not part of the same contract. This of course all depends on the facts.

 

 

Guarantee

 

Under the law of guarantee the guarantor is liable to both the principal (main creditor) and to the principal's agents so long as the contract exists. There is either a guarantee or an indemnity - you cannot have both. Banks try to trick borrowers into believing this. The court will determine which one applies by its effect irrespective of whether the bank or its agents used the 'express terms' of indemnity guarantee/ indemnity or guarantee. If the guarantee indemnity was not incorporated as part of the contract then this clause does not apply. The SAR will reveal exactly this.

 

 

Bankrutptcy

 

 

Assuming the bank/ agents debts are provable debts your father could consider bankruptcy or its alternative: Debt Relief Order. Your father may petition the court for bankruptcy in his own right, which costs about £700. He may be better advised to consider a Debt Relief Order (20k or less debt, with limited income), costing £90. If the debt is only the 18k shortfall he could opt for this. However were there any bankruptcy clauses in the contract, again the SAR will confirm this. For Debt Relief Order he just needs to approach an assured agency, which is a charity such as Citizens Advice or Shelter etc. The assured agency will then liaise with the Official Receiver. The DRO does not require a court order but the bankruptcy does.

[Thefatman]

HI all

 

Thank you all for your help and advice.

 

Due to my dads ill health and he not coping well with the stress of this. We didnt want ity to get as far as court. Whilst I fully understand he may well have won I do not think he could have coped with the stress.

 

We contacting WB explained his financial position again, explained he has no assets etc and that legal action was fruitless. We offered them a token payment of £1 per month which they accepted.

 

Again I know this may have been better financially in court but for £1 per month his health is more important

 

THanks again everyone who commented with advice and help

[sillygirl1]

You shouldn't have offered the £1 per month. You have now given them every opportunity to chase you regularly and demand information from you. If I were you I would write stating that you had been given incorrect information as to the potential liability for this alleged debt and that you consider the matter closed under the statute of limitations as more than 12 years has passed since the cause of action.

[Thefatman]

You shouldn't have offered the £1 per month. You have now given them every opportunity to chase you regularly and demand information from you. If I were you I would write stating that you had been given incorrect information as to the potential liability for this alleged debt and that you consider the matter closed under the statute of limitations as more than 12 years has passed since the cause of action.

 

In my original post I do say that up until about 3 years ago he was paying £10 per month so statute of limitations doesn't apply.

[sillygirl1]

Sorry, hadn't realised that - however hopefully they will make a 'commercial decision' to cease chasing him and close the matter due to the likelihood of them never receiving the balance of funds from any source.

[Thefatman]

Sorry, hadn't realised that - however hopefully they will make a 'commercial decision' to cease chasing him and close the matter due to the likelihood of them never receiving the balance of funds from any source.

 

Fingers crossed they will. It must cost them more than £1 per month to administer the account