Vulture funds - how to deal with ??

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Collette

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Hi, I'd like some advice on how to deal with vulture funds and whether its a good idea to approach them or let them approach you etc.


The essentials of my scenario are this (sorry about the lengthy details)


  • I bought a house during the boom years in 2006
  • Myself and partner moved to the US in 2008 and rented the house out, while topping up the monthly payments ourselves
  • Obviously the prices crashed while abroad, but I still managed to pay the mortgage (on top of the rent) with the help of my partner
  • Myself and ex-partner split up, my tenants moved out and I couldn't get any tenants in, despite dropping rent drastically (how times were different then in the rental market...)
  • I went through a series of personal problems in the US (don't want to go into details here), and I stopped paying mortgage
  • I fell 18 months behind, my mother was dealing with the bank on my behalf during this period, they agreed to sell the house in December 2012
  • I acknowledged with the bank that I owed the remaining debt (approx 180K). I was requested to sign an agreement stating that I would pay 650 euros per month for 12 months with a review period after this, I never signed
  • To be honest the debt was not my priority over this period, and I adopted a 'kick the can down the road' approach and just didn't want to know or talk about it.
  • During my years away, my mother received a few phone calls (about twice yearly) from the bank asking where I was and if I would be repaying the debt. She basically told them I was in the US and not coming back
  • In the last few years I've turned my life around and recently moved back to Ireland. Coming home I wanted to try to deal with the debt so I could start over.
  • I engaged a solicitor to contact the bank on my behalf a few months ago, he said they wouldn't engage him or return his calls, despite me giving him authority to do so, so I gave up
  • I recently ran an ICB check to see where I'm at in terms of bad credit, my mortgage debt for past 24 months up until May this year has the second last month marked as 'A - Account assigned to another party', then 'C - Closed Account' for the last month (March). There are no more entries after March. According to friends this indicates it's probably been sold to a vulture fund, as the bank were in the news at the time about selling a large amount of their bad debts to a vulture fund

I haven't heard anything or received any letters or calls from any bank or financial institution. I'm really unsure about my next step, whether to just wait to see if I get any contact from whoever has the debt, or dig deeper and try to find out who it is and contact them ? Maybe I should keep contacting the bank until they get back to me ? Does anyone have any experience dealing with these funds and whether its better to approach them or be approached from a negotiation perspective ? To be honest I have no assets and little savings as have only recently got employment, and cleared debts with my mother, so would not be able to give much if taken to court at the moment regardless.

My main fear is that I'll get a court summons out of the blue and I feel like I'll be constantly looking over my shoulder until I know what's happening or sort this out. I live with my elderly mother and she is stressed they'll take the house if she leaves it to me in her will.

A friend told me that after 6 years they can't take me to court, but is unsure of whether this is 6 years after the house was sold, or 6 years after they called my mother last to enquire on my whereabouts (about 3 years ago), or 6 years after my solicitor unsuccessfully contacted the bank to try to engage (3 months ago), has anyone any idea about this ?

Sorry about the lengthy post again - just a complete brain dump and would rather be honest.

Thanks,
Collette
 
Hi Collette

At this stage, 4 years after the property sale, chances are that you will never hear from the bank and/or whomever they may or may not have assigned the debt to. If the bank is reporting the account to the ICB as being closed then you are not going to hear from them. In a weird way, by not engaging with your solicitor, they were trying to tell you something without saying anything. And vulture funds are normally only interested in loans with property still attached. They go after the property to make their money.

There are two schools of thought on the statute of limitations as it applies to outstanding mortgage debt after a property is sold. One school of thought says that it is six years from when the property is sold. Another school of thought says that it is twelve years because the debt was originally property related. As far as I know there isn't any case law that could provide guidance. What we do know is that the clock starts ticking following the last payment or written acknowledgement by you of the debt. So whatever you do, don't put anything in writing as this resets the clock.

As your mother is considering leaving her house to you, and a €180k debt being large enough for somebody to have a go, you might want to consider wiping the slate clean by applying to make yourself bankrupt. It lasts between one and three years depending on whether or not you have to make a contribution from your wages but once you are discharged that's it, no bank or vulture fund can touch you, and you can inherit your mother's house without fear of an old creditor making a claim on you or it.
 
Have you access to the house now ? I presume it's till in your name. Why not let it out or start living in it. Let the bank come to you. How much is it worth now ?
Collette said:
My main fear is that I'll get a court summons out of the blue and I feel like I'll be constantly looking over my shoulder until I know what's happening or sort this out. I live with my elderly mother and she is stressed they'll take the house if she leaves it to me in her will.
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Don't worry about things that may not happen. If they send you a court summons just turn up and tell your story. They cannot take your mother's house.
 
Thanks guys. @Elacto actually house was sold in December 2012, with the banks permission. They took the proceeds and the remaining balance on the mortgage was outstanding, although nor formal repayment agreement was put in place.

@TLO, thanks for the advise. I've thought about bankruptcy and it might be something I action in the next few months to put my mind at ease. Given that I won't be doing much the next few years other than trying to start to rebuild my financial foundations it might be my best option to put my mind at ease.
 
Then the chances are they have written off the debt. Don't engage with them again.
 
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