Getting mortgage while still owing money

Discussion in 'Personal Insolvency, bankruptcy, etc' started by zxcvbnm, 11 Feb 2019.

  1. zxcvbnm

    zxcvbnm Frequent Poster

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    I have a significant debt owed to a bank. However - I am thinking letting it run the 6 years whereby the statute of limitations runs out meaning I will no longer be legally obliged to pay the debt.

    However - will this outstanding debt always show on my ICB report forever more? And if so, does it mean I will never be granted a mortgage by another bank?

    Alternatively - does anyone know the scenario around getting a mortgage after going insolvent? How difficult is it? How many years does it take before I may get granted one?
     
  2. David1234

    David1234 Frequent Poster

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    How will you be able to service this new debt when you can't/won't pay off your existing debt?
     
  3. Cervelo

    Cervelo Frequent Poster

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    I think before we can answer this properly and give you the answers that you need, we would require a little more info about your unique circumstances ??
     
  4. Dazzler123

    Dazzler123 Registered User

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    The bank will issue legal proceedings before 6 years of no payments. Plus it's not as simple as 6 years... it depends on the nature of the loan. Put simply this is a very bad idea and will remain on your icb for longer than 6 Yeats in all likelihood
     
  5. RedOnion

    RedOnion Frequent Poster

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    Yes.
    Statute of limitations is a risky game to play. Once it runs out, the lender cannot enforce the debt, but that doesn't force them to remove it from credit registers.
    In fact CCR legislation forces them to keep it until they no longer consider the debt owed.
     
  6. zxcvbnm

    zxcvbnm Frequent Poster

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    Thanks for reply.

    While I accept you cant say with certainty, but how likely is it really that bank will issue legal proceedings before 6 years is up? Through all my research on forums / internet I am yet to come across someone whereby this actually happened. I have 2 years left before the 6 years is up.

    (That of course is not to say it wont happen - but I am just regaling my own knowledge)

    DO you know of this happening frequently? Or at all?
     
  7. zxcvbnm

    zxcvbnm Frequent Poster

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    Thank you for reply.

    SO if you walk away from the debt it doesn't just fall off your records after 6 years? I was of the impression that the records only go back 6 years?

    Also I am assuming that if you reach an informal full and final lump sum settlement that in that instance the bank would be forced to eventually remove from credit register yes? (After 6 years or whatever it is)
     
  8. RedOnion

    RedOnion Frequent Poster

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    Yes, it happens.
    It all depends on the amount owing, the assumed means of the borrower, and the bank.
    No point a bank incurring 10k legal expenses on a 5k debt they're not going to recover. In those cases they might sell the debts.
     
  9. zxcvbnm

    zxcvbnm Frequent Poster

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    Last edited: 12 Feb 2019 at 2:57 PM
    Or ultimately my query is,

    - if I walk away from the debt am I running the risk of never getting a mortgage? (My thinking being it doesn't disappear after 6 years because each year the debt is defaulted on meaning it goes on forever)

    - if the above statement is correct, I assume that means my only chance of getting a mortgage in the future is by getting a solution to my current debt situation be it formal or informal yes?

    I'm basically trying to figure out if walking away from the debt using the 6 years rule is a viable option if we assume that getting a mortgage at sometime in the future is something I want to prioritise.
    WHile not legally owing the debt after 6 years is attractive, if it comes at a cost of me having to rent forever then that is too high a price.

    Thanks
     
    Last edited: 12 Feb 2019 at 2:57 PM
  10. PaddyBloggit

    PaddyBloggit Frequent Poster

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    Yes