Katya

Hiya

Ive been talking with people around the school gate and so many people are going home. Some have said that they are going to the bank and handing their keys back - going to notary and signing the house over to the bank.
However , here is the bit i really dont get ....

If you were given a 130% mortgage a few years back - say 130K and now your propery is worth 60-70K - what happens to the deficiet of money? Ive been told it is just written off - but surely the owner of the property has a liability for this?

Is this true or just mums gossiping at school?? haha

Katya x

03630

The person borrowing the money has a liability to repay it. If after fees and a distressed sale the bank is out of pocket they may well have to write it off, but it will do your credit rating no good. The Spanish get upset if you bounce a cheque. I am uncertain the reaction if you just leave owing thousands.

Helpful-Bob

Money is money but at least in this economic climate defaulters are not alone. I think it will depend on the bank or building society providing the mortgage.

However when all is said and done there are many happy expats living and more than happy in both Spain and Portugal.

Mitzyboy

You know, this has bothered me too
I dont think its as easy as just throwing your key over the counter .... if they dont recover what you owe them then surely you are liable for the balance. And the bank is going to sell it for whatever they can get, so the chances are they will accept a lot more than its worth, thereby increasing the ex owners liability

Mookster

Very Correct Mitzyboy.

It always amazes me how people can just hand the keys in and walk away thinking thats the end of it....it isnt....BIG TIME
If you have a property or other assets in the UK they can pursue you for the out standing balance after the house has been sold by the bank at a distressed price. You are far better off selling it at a loss and having some control over the price and then coming to an aggrement with the lender to pay back the balance over a period of time.

Mitzyboy

Are you sure they have the power to take assets in the UK? That will be a shock to some people

Hillybilly

Realistically though, (whether it's right or wrong) how many people who have reached the stage where they intend to hand the keys to their Spanish property back to the bank are likely to have any assets in the UK which could be pursued?

Brizey

Handing keys back is very dangerous indeed as you have volunteered return and will forsake any legal claim you could have had.
Surely people must remember the early 90's when this was rife and people were shocked when lenders sought balance of payment plus costs. The fact that keys were handed back proved to be a devastating factor when legal actions were taken.
NEVER NEVER hand the keys back !!!

poshnbucks

The Spanish Banks have an agreement with the UK Government and will pursue you in the UK for any outstanding monies after the house in Spain is sold and legal fees and interest are added. You will not get away with this. I have covered this in other threads.Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters O. J. L012 – 16.01.2001, p.1). – “Brussels I”......http://en.wikipedia.org/wiki/Brussels_Regime. Remember all the information you gave away in your rush to settle in Spain, Passport number birthdays etc etc well they still have that and the minute you pop up at the Tax office/DVLA or Child benefit etc they will find you. If you own a UK property a charge will be put over that property. So in short visit your Spanish bank and sort it out.There were a number of people in days gone by who took out 120% Spanish Mortgages did not a pot to hiss in and worked as a "UK Builder" now there is no work and they just want to walk away. Well sorry would you hand the property back if it was worth twice the value.....errrrr I don't think so.Don't listen to the School gate lawyers, They are the ones still driving their UK cars after five years still on UK plates with no MOT or insurance.

Brizey

Poshnbucks

All credit to you !
That's a serious bit of research and unfortunately very relevant to many poor souls at the moment

jackytoo

Good point! Also the costs of pursuing all these defaultors in other countries will be too high. Will just become part of the toxic debt.

Mitzyboy

Not if theres, say, 50k in defecit, and of course all the costs and interest get added to your debt. They'll go for it if they have the means.

And it doesn't really matter if you have assets or not I guess, if there is an agreement between the UK and Spain then you could end up with a huge outstanding debt against your name and an inability to get credit / a mortgage

rugbymatt

I have heard tales of creditors and banks going after family members and anyone they can link to the debtor, sad times indeed, and I doubt we have seen the last of it at all.

Helpful-Bob

I agree if its a worthwhile sum of money why would the banks not go for it?
They normally dump the work of collection in England to a debt collector/solicitor, so its not too much effort for them.
I'm sure all the banks worldwide would be happy for some money back in the box.

Hillybilly

If the court systems/debt collection agencies in the UK get involved I (cynically) wouldn't imagine that they will

A) prioritise the chasing and collection of moneys owed overseas
B) succeed in recovering the debt

based on my experience of having taken a former employee to court in the UK in 2002 for having stolen over 8k from my business. Oh yes, he was found guilty but was only ordered to pay 1750 quid in compensation, at a rate of 40 quid per month of which, 7 years later, only 1000 has been collected. Last week I received a letter from the court saying that they want to remove the debt from their accounts as they are unable to ascertain the whereabouts of the defendant...it seems to be easy to slip under the radar if you know how, but would you want to live like that?

On the reverse side, I know a family living here in Spain who ran up huge credit card debts (20k+) in the UK as they were moving to Spain and have never been chased for these in 5 years (despite one of them now receiving a UK pension and the other being ex-civil service and visiting the UK once a year, so you'd think they could easily be traced)...but now they couldn't move back to the UK without changing their ID and starting over (which they do talk about...)