A. One question comes to mind you say you have £20,000 court costs, is this £20,000 on loans and credit cards or ‘actual’ court costs, if the former then you will be able to include them in any IVA, DRO, debt management plan or bankruptcy, if the latter then you will have to pay them. Can you give me some more information, are you a house owner or in rented accommodation?

Many thanks

Mike

A. I would have a look at Consumer Credit Counselling Services CCCS in the USA, website http://cccsusa.org/ they are a non profit making company and their services should be free to the US consumer.

A. Unfortunately your credit rating will be marked down by the creditors/lenders that feature in your debt management plan because you are no longer keeping the previously agreed payments when you first took out the credit.

The letting agency will undertake a credit search on you which may then lead to them asking you to put a bond down, usually three months of rent payments in advance, if unable to do this then they may ask for a guarantor, this is someone that will guarantee the payments if you fail. The guarantor will also have to undergo a credit search.

I know you do not intend to fail, but landlords will request a credit search on every new tenant. This also applies to people that go bankrupt, in extreme cases like this the letting agency may then ask for a six month bond.

It may be prudent to ask the debt management plan provider for a conduct letter, this is a note that confirms that you have made payments on time and actively cooperating with them and your lenders. This is not essential but may help.

I do not envisage you not being able to move, just be aware that you may need to find the bond or the guarantor.

I know it is a pain, I have been guarantor for two of my children and their credit rating was v good!

Good luck, Mike

A. Are you sitting down? I have some bad news for you. In the UK a mortgage lender has six years to recover the interest element of the debt and 12 years for the capital (the amount you borrowed).

The lender will use the sale proceeds of the home to clear the interest and that leaves then 12 years to pursue any named persons on the mortgage agreement. Importantly the time clock runs from the date of the last payment on the account or acknowledgement of the debt, this is usually done in writing whereby you admit the debt.

If contact is made you do have options, you have a choice between either refusing to pay anything and rely on the outcome of any legal proceedings that may well begin, or negotiate a settlement.

With skilful negotiation often a full and final settlement can be reached by paying a fraction of the initial claim. However, every case is determined on its merits, including the amount of assets, if any, that you may have and your monthly disposable income as this may well reflect upon the amount required to settle. Points to bear in mind when deciding what option to go for:
• Was your house sold below the market value?
• Was the sale through reputable estate agents or auctioneers?
• Was your property repossessed more than 6 years ago?

The Council of Mortgage Lenders (CML) announced a directive which came in to force on the 11 Feb 2000. Under this directive those that have not been contacted by the lender for more than 6 years from the date of the sale of the property will now not have to repay their mortgage shortfall debt.

Unfortunately this is a voluntary code and applies only to new cases and not those with existing shortfall debt repayments or where the lender has already started recovery procedures. This may be your lucky card!

It is a difficult call as to whether you should tell your new partner, only you know how strong the relationship is, it must be a stressful time with this always in the background and not knowing when it will rear up.

If the mortgage lender does make contact then I would urge you to get immediate professional advice as to all your options BEFORE you make contact with the lender, their agents or a debt collector.

The reason is simple, debt collectors and solicitors are good at getting money out of people that often cannot really afford to pay, by getting the correct advice you may be able to propose alternative methods of repayment and which could be over a vastly reduced period.

Good luck and fingers crossed!

A. Unfortunately lenders do not see it like that, if you have any joint debts then this means that the named persons on the agreement are responsible for the full amount outstanding, lenders do not just halve it and allow you to pay 50% each.
So if you are unable to make the monthly payments and say go bankrupt then your wife will be responsible for the full amount outstanding.
The way to look at it is like this, any debt that is in the name of more than one person, this is typically a mortgage held in a husband and wife’s name, then each named person is liable for the whole debt, however you never pay more than what is owed.