Debt

[Kamz]

Can someone please advise what is the law on debt recovery? when the property bubble burst in 94 I was repossessed, debited with negative equity of 35k which am being chased for. being on low income and now no income at all now. Isnt there an insurance that lenders cover for this type of event?

[dzug]

Yes there's an insurance. It protects the lenders. Their insurance company then comes after you for the money.

Others may have advice on what you can do about it.

[themas]

With mortgages the lender legally has 12 years from the time the debt was last acknowledged before the debt becomes "statute barred", but if the lender is a member of the Council of Mortgage Lenders a voluntary 6 year period operates. Look at CML website to see if your lender is a member.

Acknowledging the debt can happen in all sorts of ways but if you've had no contact at all since repossession then you are outside the CML 6 year limit BUT there is no limit if the lender got a Court money judgement at the same time as the Court repossession order.

Often lenders chasing these shortfall debts are willing to agree a settlement for a fraction of the debt if satisfied you have no assets & low (or nil) income.

This is quite complex & you really need advice from a local CAB or law centre