I had a house reposessed by Abbey National 7/1/97 who then sold the property for £28 000 which was about £12 000 less than its valuation. I was forwarded a letter asking me to pay £15 000 as the overall shortfall. I never acknowledged this debt verbally or in writing.

18 months ago after several years of renting I purchased our current home Via an adverse credit lender. 6 Months ago I swapped over to Abbey National at the advice of my broker because my CCJ had been wiped clear and my credit was excellent. I was obviously worried about going to the same lender but was assured that this was not an issue otherwise they would not offer me the mortgage.

I have since had 2 solicitors letters sent to my home and 2 sent to my place of work marked private and confidential. Embarrassingly, one was opened by a colleague by accident. I decided to phone 3 days ago to point out that I was not happy with the letters being sent to work etc. and that I did not accept the debt especially as the 6 yr period had run out.

I have today received a letter from DLA Solicitors which states "We have a 6 year period of limitation from the date of sale of the property. As the property was sold in 12/8/97 and contact was made on 1/8/03, your debt lies within this period and is therefore active".

Questions: 1. What happens after 12/8/03 when the 6 years is up? 2. Can Abbey National log another CCJ on the same debt? 3. Can they use information on a new mortgage application to chase up an old mortgage debt? 4. They have written in the letter "We note the contents of your letter" when I have never sent them any letters. What action should I take? 5. I contacted DLA by telephone on 1/8/03. Please confirm that this does not start the 6yr period again because telephone calls dont count do they?

Your reply will be much appreciated.

-- John David Oliver (john36riv@yahoo.co.uk), August 06, 2003

Answers

John,

Firstly, I would recommend you read as many previous postings as you can on the Q&A site and read the "Do's & Dont's on the Home Repo page too.

Be advised lenders read this site including Abbey National.

Unfortunately the lender has 12 years to chase you (see Bristol & West v Bartlett - July, 2002). The 12 years usually runs from the 2nd or 3rd missed mortgage payment, however, you need to check your mortgage terms & conditions to be certain, it could be, for example from the 1st missed mortgage payment. In respect to interest the limitation period is 6 years (see postings on Home repo Q&A for more details).

The Council of Mortgage Lenders have a Voluntary 6 year code which states:

"In addition, from 11 February 2000, lenders who are members of the Council of Mortgage Lenders have agreed voluntarily that they will begin all recovery action for the shortfall within the first six years following the SALE of a property in possession. Anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender about recovering any outstanding debt will not now be asked to pay the shortfall. The Association of British Insurers supports this approach on behalf of the mortgage indemnity insurers.

All lenders which subscribe to the Code have now agreed to adhere to it whether they are a CML member or not. You can check whether a lender subscribes to the Mortgage Code by phoning The Mortgage Code Compliance Board on 01785 218200."

See CML webpage for full explanation: www.cml.org.uk/servlet/dycon/zt-cml/cml/live/en/cml/pub_info_dept

I think the fact that Abbey National have contacted you about this alleged debt 11 days before the end of the 6 year voluntary code period is despicable.

I think going back to the Abbey National was a BIG mistake and whoever advised you to go back to them needs their brains tested.

I would start by sarning Abbey National and put the lender to strict proof of this alleged debt. I would try and get hard evidence of underselling, find out what similar properties were selling for in the area of your repo'd property at that time. I would try in the first instance to reach a negotiated settlement for a nominal amount, especially in view of the fact that your property was undersold. If Abbey prove to be difficult you can take your case to the Financial Ombudsman, you have 6 years from date of sale in which to do this. You also only have 6 years from date of sale to counterclaim underselling in court. If they are being difficult I would also recommend you contact your local MP (see MP Mike Hancock's EDM 62 on Repo page).

Continue to be careful not to acknowledge the debt by stating on any communications that you do not acknowledge the debt, that you deny liability and that you dispute the debt. If this mortgage was a joint liability one then be aware that any joint partner may acknowledge the debt for all parties by making a part payment. An acknowledgement/part payment can restart the 12 year limitation period. Telephone calls cannot acknowledge a debt. Finally if the lender has a Money Judgment Order (MJO) then, in theory) they can chase you indefinitely. Sorry it's not better news but that's the way it is.

Please be advised that I'm not a professional advisor so please check all this out with one. If you have any further queries just post them up. Good Luck.

Mark.

-- M Amos (idgroms@hotmail.com), August 07, 2003.

John,

I meant to include that the 12 year period comes under the Limitation Act 1980. The 6 year voluntary code was invented by the CML and is a seperate thing entirely. Make sure you check their dates.

Mark.

-- M Amos (idgroms@hotmail.com), August 07, 2003.

One small correction, see following: "that any EX joint partner/borrower may acknowledge the debt for all parties by making a part payment."

-- M Amos (idgroms@hotmail.com), August 07, 2003.