6 year rule

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I have recently received a letter from a debt recovery agency informing me that a property I moved out of in 1990 was repossessed by the lender(Halifax B.S.)with a shortfall of over #23000. The Lender then made a claim with the MIG insurer (Royal & Sun Alliance) who have then passed the debt to the recovery agency. I only lived in this property for three months and broke up with the joint mortgage holder. I went back to the Estate Agent/Mortgage Broker/Financial Advisor who arranged the mortgage and MIG and asked him to get me off this mortgage at all costs. After six weeks of paperwork and me providing a cheque for the interim mortgage and utility payments, I was informed that once this cheque, made payable to my ex-partner, was cashed by him he had accepted the liability for the mortgage. It appears he handed in the keys to the property soon after. I was told at the time by this financial advisor that I did not require a Solicitor's services. I have contacted him about this matter and he has informed me in writing that he has destroyed all records. I have also contacted the Lender and the Debt recovery agency asking them for any records and information. In all correspondance I have denied any liability for this debt. I understand there has been a recent ruling regarding the 6/12 year question. Please can you let me know where I stand?

-- Mrs Julie Alford (julie.alford@cwcom.net), February 07, 1999


I am rather suprised by the debate over 6/12 year satute of limitation as I understood that debts that evolved from Consumer Credit could not be persued if the debt was over 7 years old. Is this not the case or simply with reference to Consumer Credit rather than mortgages?

Can Consumer Credit debts (unsecured) be persued after 7 years?

Do Credit Reference Agencies hold any data relating to consumer credit debt beyond 7 years?

The reason I ask is that amid spiralling debets and redundancy in 1994 I sold my home and repaid my negative equity. Unfortunately this left me crippled with unsecured loans and credit card debts. After making the classic mistake of refinancing the debts (several times) I was in a dire finance situation. The recovery agents would not accept any of my offers and eventually I told them I couldn't afford anything and stopped paying. I haven't heard from them since the end of 1995.

I know that they can chase me now, but is there a time limit for there action?

-- Zak Middleton (zakerym@hotmail.com), February 16, 1999.

In answer to the query about how long credit reference agencies hold credit information for... in theory it's six years. We don't know that they hold credit information for longer than that but they do hold details of who's lived where for longer than that. If you look in the Equifax/Experian electoral roll stuff in the Blacklisted section of this site you'll see information going back 14 years.

They must not make credit information available if it is more than six years old. But that doesn't mean that it isn't archived or retained as part of data backups.

-- Lee (repossession@bigfoot.com), March 06, 1999.

the answer to the question on the length of time that is allowed before the debt is annuled is as follows, mortgage default shortfall claim is and wait for this 12years if no contact from the original date of the repossession. on consumer credit ie bank loans credit cards is 6 years then the ccj will automatically fall off!but and this is the big but! if contacted within the 6 years then it becomes a rolling 6 year term hope this is of help. regards gray

-- gray hull (gray@hully.karoo.co.uk), September 20, 1999.

I think this may be of interest to many visitors. 26/1/00 The Council of Mortgae Lenders reports today that the limit on shortfall recovery falls. Quote "In future lenders have agreed voluntarily that they will being all recovery action within the first SIX years after the sale of a propery in possession.

The change takes effect form 11 February, and means that anyone whose property was taken into possession and sold more than six years ago, and who has not been contacted by their lender for recovery of any outstanding debt by that date, will not then be asked to pay the shortfall. The new time limi applies only tonew cases, and does not affect anyone with existing shortfall debt repayment arrangements or where the lender has alrady begun recover procedures. The new policy has been agreed following consultation with the National Association of Citizens' Advice Bureaux and the Federation of Independent Advice Centres, who had both asked the CML to consider the chang"

My personal answer is therefore to keep them talking as long as possible until you are past 6 years and then through this at them hard.

Please let me know if you would like a copy of this Press Release.

-- Cheryl Grant (chaz@vas-net.net), March 14, 2000.


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Headnote 100044201 - Mortgages - Banking and Financial Services - Limitation - Sale of mortgaged properties by mortgagee in possession - Mortgagor claimed that sales were at undervalue and that mortgagee had wrongly paid proceeds to another chargee - Whether undervalue claim statute- barred - Limitation Act 1980 ss 2, 8, 36 - Raja v Lloyds TSB Bank plc - Chancery Division - Mr M Tugendhat QC (sitting as a Deputy High Court Judge) - 19.04.00


The claimant, R, owned four properties charged to the defendant bank and subject to further charges. In 1987 the bank demanded repayment of facilities granted to R and when R failed to pay obtained possession orders in respect of the properties. Three of the properties were sold in 1989, 1990 and 1991. R issued proceedings in 1997 on the basis that the proceeds of sale should have discharged his indebtedness leaving a surplus. Further the sales were at undervalues. The bank's case was that it had credited R with the proceeds of sale to the extent to which its charges had priority and that R remained substantially indebted to the bank. That indebtedness was the subject of a counterclaim. The master struck out the statement of claim and R appealed.


(1) Whether the claim for damages arising out of the alleged sale at an undervalue was statute-barred.

(2) Whether the bank misapplied the proceeds of sale by paying the subsequent chargee.

HELD (dismissing the appeal)

(1) A mortgage by deed was a specialty under s 8 of the Limitation Act 1980 but the duty on a mortgagee to obtain a proper price did not arise under the deeds of charge but in equity (Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295, Medforth v Blake [1999] 3 WLR 922; NLC 299059007). The period of limitation was not therefore 12 years under s 8. The claim for damages for breach of the duty in equity corresponded with the remedy for breach of a duty of care in tort. The court would therefore apply the six year limitation period in tort under s 2 by analogy under s 36 of the 1980 Act (Coulthard v Disco Mix Club Ltd [1999] 2 All ER 457; NLC 299033503 and Companhia de Seguros Imperio v Heath (REBX) Ltd [1999] 1 All ER (Comm) 750; NLC 299035601 followed). Accordingly the undervalue claim was statute- barred.

(2) There was no authority for the proposition that a mortgagee was bound to recover all that he was owed out of the proceeds of sale before paying them over to the encumbrancer next in order, or that he owed a duty not to disadvantage the mortgagor. Section 105 of the Law of Property Act 1925 created a trust over the proceeds of sale but did not oblige a mortgagee to exhaust his remedies against the proceeds of sale.

Stephen Barbour, Barrister

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Copyright Croner.CCH Group Ltd trading as CCH.New Law

-- (alison23@excite.co.uk), May 12, 2000.

That latter point (2) in the Raja v Lloyds High Court case will presumably now be overruled by the Court of appeal judgement in Skipton v Stott 2001?

I see the judge (sitting as Deputy High Court judge) in Raja v Lloyds was Mr M Tugendhat QC, presumably Michael Tugendhat. Lord Christopher Tugendhat is Chairman of Abbey National bank. Small world, isn't it?

-- Eleanor Scott (eleanor.scott@btinternet.com), April 14, 2001.

Sorry about typo above - Skipton v Stott was heard in the Court of Appeal in 2000, not 2001 (in April, I believe).

-- Eleanor Scott (eleanor.scott@btinternet.com), April 15, 2001.

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