Getting mortgage while still owing money

zxcvbnm

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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?
 

David1234

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214
How will you be able to service this new debt when you can't/won't pay off your existing debt?
 

Cervelo

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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 ??
 

Dazzler123

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49
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?
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
 

RedOnion

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3,132
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?
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.
 

zxcvbnm

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258
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
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?
 

zxcvbnm

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258
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.
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)
 

RedOnion

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3,132
DO you know of this happening frequently? Or at all?
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.
 

zxcvbnm

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258
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
 
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