Debt Questions

Situation: First Plus gave us a loan which at the time we could not really afford even according to their own criteria. The loan immediately meant we were in negative equity - original mortgage £121,000, First Plus loan inc ins £84,000. House valuation at the time £165,000. Since then I have had to change job and now earn a lot less than I did, therefore do not have the ability to keep up with the payments. They have put payments on hold for the moment but will need to sort it out soon or will end up with reposession (they tried before but we paid off the arrears with family help)

Question : Has anyone ever managed to get First Plus or similar companies to write off a secured loan? If so, how?

Any other advice welcome.

Thanks,
Pubman.

Depends what you mean by "write off"?

We had this situation and the only option for us was to leave the house for repossession and then bankruptcy

Do you have other unsecured debts?

By write off I mean go away and forget about chasing us for the money!! I know that credit card companies / banks have contingency funds to write off unsecured debt. Just wondered if anyone had had any success with companies like FP. Yes I do have other debts but dealing with these individually.

No, they wont just go away, I am afraid, these secured loan companies are renowned for their aggressive tactics,in our case, we had to go bankrupt because of a huge secured loan (as well as other unsecured debt) We tried to sell the house, but they would not let us as there was a lot of negative equity

Even now, the secured loan company are still saying we are liable for the shortfall when the house does sell, but thats rubbish, bankruptcy was the only option we had to get rid of all our debts once and for all

Wow, how on earth did you get the loan in the first place when it was obvious there wasn't enough equity.

Theres no reason at all why a company would write off a loan if they thought there was a chance of it being repaid, which they would think when it was taken out.

The reason its secured on the property is so that they are more confident they will get their money, but interesting concept. Not sure if feasible unless bankrupt.

You can make what they call a 'shortfall request', pubman.

What that means is, if you are prepared / able to sell the property but not for enough to repay First Plus's debt, they will consider a request to convert the balance to an unsecured loan.

You will need to provide them with an I&E statement and make a proposal to pay the unsecured balance off at a 'reasonable' rate, over 3 - 5 years.

So if your mortgage + Firstplus debt is say £205,000 in total, and say you can sell the house for say £195,000, they should hopefully agree to your repaying the balance over 5 years.

It's an option to consider, anyway.

It seems as if First Plus are prepared to do this in order to extricate themselves from 125% mortgages they agreed pre credit crunch.

Hope this helps.

Hi there

You could contact the Financial Ombudsman Service to make a complaint re 'irresponsible lending'. It is a long shot but worth looking into. I have heard of cases where FOS have become involved and the creditors have written off part of the debt.

Fatreesh

Thanks for all your suggestions. I was looking at this from an irresponsible lending angle and will see what I can take furher from your suggestions.

Pubman1