Northern rocks legal department as been chasing me for a £18000+ shortfall for over a year now, the last letter from them was in july threatning with court action, as I have remarried and want to get on with my life, get another mortgage etc, what can I do? do I make an offer to settle the debt as things are moving too slow and how much to offer them, I havent got alot, can anybody advise?

-- gary ausley (gaz@pc-x.co.uk), October 10, 2002

Answers

There is some evidence from postings on this site, and I also know first hand from my friend's experience, that lenders such as the Halifax will tend to settle for around 5% of the shortfall claim.

The problem is in getting to the point where this outcome can be achieved. There has been a lot of debate on this site about the issue of filling in Income & Expenditure forms and my own 5 cents for what it's worth is that you should avoid doing this if at all possible.

The best tactic to adopt I believe, is to follow the advice in the Repossession section and put the lender to strict proof of their claim. This means that they will have to justify in detail the money they are seeking, with copies of invoices for the services of estate agents, solicitors, repairers etc..

There may also be scope for arguing that you were unfairly treated or have been mislead in some way, once you have a chance to peruse the copies of documents the lender is obliged to supply to you on service of an SARN.

The key elements here are patience, determination and holding your nerve. If they fail to provide information such as a copy of the mortgage deed, MIG policy etc., then you must keep asking for it.

The more work you create for them the more likely they will be to settle for a low figure. As to the right time to propose a deal? I don't think there is any hard and fast rule as each case is different so it's down to individual judgement.

In my friend's case it took about 15 months to reach the point where she had enough information to write to the Halifax with a counterclaim for unfair treatment and wrongful repossession of her flat. Although we had little expectation that the Halifax would drop it's claim and agree to settle hers, I believe that it did show that she was not going to be a soft touch. Their reply was a complete rejection of her claim, but the letter contained an offer to settle for half the amount they were claiming.

After delaying her reply she wrote refuting their claim in it's entirety but offering a 'goodwill' payment of about 3% in order to give them an opportunity to save face, and because she realised that they could "make my life difficult by damaging my credit rating".

They replied within 48 hours ignoring the 'goodwill' gesture but noting that she was offering a 'settlement of the debt'and stating that they would accept a full and final payment of £xxxx which amounted to about 5% of the original claim.

After a further exchange of letters to ensure that she would receive a suitable written acknowledgment of final settlement, she paid the figure they'd offered and ended the matter.

At no time did she fill in an I & E form or give other details of income. Neither did she acknowledge the debt.

My advice to you in summary then is simple. If your aim is to avoid a large financial settlement you will have to accept that the matter is likely to be protracted.

-- Gordon Bennet (arsenewhinger@hotmail.com), October 10, 2002.