I have just been reading old messages and noticed one posted back in June 2001.

Am I right in thinking the Halifax have agreed not to chase shortfalls six years after properties have been repossessed?

Is this their own agreement, or is part of the six year rule. I.e. if I handed the keys back in 1995 and the property was sold in 1996, but I have been in correspondence with representatives of the Halifax, but refuted their claim for shortfall, can I now tell the Halifax to naff off and leave me alone? Of do I have to put up with this indefinitely until I have had a nervous breakdown and end up in a mental institution?

-- One Angry Mother (madcow678@hotmail.com), September 24, 2002

Answers

Unfortunately contact was made within six years so that have a minimum of 12 years to collect the alleged shortfall. Sorry!

-- Too scared to say (iwasduped@yahoo.com), September 24, 2002.

Hi

There are 2 issues here: the '6 year rule' - which is really the Council of Mortgage Lenders voluntary agreement, and the provisions of the Limitation Act 1980.

1. CML agreement: this voluntary agreement applies from 11.2.02 and states that if the borrower is not contacted by the lender within 6 years of the repo'd house being sold, then s/he will not be pursued for the debt. If you were in correspondence with the lender between 1996 and 2002 there will have been 'contact' and the CML agreement will therefore not apply.

2. The LA '80: it is now the case that a lender has 12 years to sue a borrower for a shortfall debt. The 12 years starts to run from the date the lender could first have taken possession proceedings (this depends on the terms of the mortgage, but is usually after 2 or 3 missed payment).

However, the 12 years is re-started whenever a part payment is made or a signed, written acknowledgment given by the borrower to the lender.

Your correspondence with the lender, if you ALWAYS denied liability for their claim, will NOT have amounted to an acknowledgment and will NOT have kicked-off another 12 years. However, it does look as if the lender has up to another 5 years (1995-2007) to sue for the debt (depends on date of initial default or other acknowledgment or part payment) if it cannot be negotiated satisfactorily.

A CAB will help you negotiate a 'full and final' settlement.

Good luck and all the best

Guy

-- Guy (guy@skipwith107.freeserve.co.uk), September 24, 2002.