Complicated Secured Loan Issue - Advice Needed - Scotish Law

[Kipski]

Hi folks

I have a complicated "statute barred" issue that i need help with which is covered by the "Prescription & Limitation Act (Scotland).

If anyone feels they can help, i would be pleased to hear from you. Alternatively, if you kbpw of a good solicitpr who specialises in this area pm me their details...

I need clarification on the legal standing and classification of a loan at this point in preperation for a challenge against the loan company.

Thanks in advance...

[Curlyben]

Re: Complicated Secured Loan Issue - Advice Needed - Scotish Law

Once a debt reaches SB status under Scottish Law it CEASES to exist.
There can be ZERO collection activity or court action taken.

Anything else ?

What's the security in this case ??

[Kipski]

Re: Complicated Secured Loan Issue - Advice Needed - Scotish Law

Hi Curly, thanks for the quick response. Unfortunately this is a little more complicated

It involves a secured loan in Scotland which is 11 years old, I will try and keep this a succinct as possible and just cover the key points, if you need clarification on anything let me know

There was a mortgaged property which was sold, however a secured loan was taken out against it after the sale (we believe fraudulently). We have only just found out about the loan when reviewing a credit file.

We are addressing the fraudulent nature of the loan separately, so I am interested solely in the legal status of the loan here...

So, we have a secured loan, which is secured against a property which is not ours... The loan is 11 years old and so far as we can tell, no payment has ever been made, however, on the credit file it is marked as "U" which indicates it is current and up to date as far back as we can see. It appears that the loan company has simply let the interest accumulate. What was once probably a loan of around £5000 is now over £20,000.

We are trying to determine the legal status of the loan before we attempt to deal with the loan company, so absolutely no contact has been made thus far.

I have a number of questions which I need answers to regarding this...

Under the "Prescription & Limitation Act (Scotland)" secured and unsecured loans are treated differently, so my first questions would need to be:

Although the loan is shown on the credit file as secured, as the property is not ours, is it "legally" a secured loan in the eyes of the law? How the loan became detached from the property I do not know at this stage, there may have been a mistake by the solicitors during the exchange of title searches, it may have been taken out after the sale and the loan company made a mistake with their checks, hopefully that will be determined during our investigation...

[Kipski]

Re: Complicated Secured Loan Issue - Advice Needed - Scotish Law

The legal status of the loan will make a massive difference in this case. Assuming we cannot prove the loan was taken out fraudulently and we are liable for it, we will be relying on the status to determine our next step...

I see a number of possible interpretations on how the loan could be viewed depending on how the situation is interpreted.

a) If it is not "legally" a secured loan:

5 years have passed it should be statute barred?? It is not secured on an asset in the eyes of the law, regardless of the lenders intention or understanding.

b) If it is "legally" still a secured loan:

The matter of whether it might be statute barred could be complicated.

i) Option 1

"The matter of whether it might be statute barred could be complicated. It is not always 20 years in Scotland, even on mortgages or secured loans

www.nationaldebtline.co.uk/sc...age_shortfalls

Quote:
If your home has been repossessed and sold, mortgage shortfall debts can be pursued against you. If the lender obtained a sheriff court decree for repayment of the debt against you they are likely to have up to 20 years to pursue you.

If on the other hand there is no court order, e.g. you gave up the house before the court date, the lender may be restricted to trying to recover the debt within five years of the date of your repossession.

But in this case it is (a) a secured loan not a mortgage, and they are not always treated the same in all cases. (b) There was no repossession OR court order, so it was not sold as a result, it is not even in default 11 years later"

ii) Option 2

www.nationaldebtline.co.uk/scotland/factsheet.php?page=23_prescription_and_limitation_ act#chapter1

I think this may be how it could be treated, the house was sold but the loan was not paid from the proceeds... Even though we may find that the loan could have been taken out after the sale had already gone through :/

Quote:
MORTGAGE SHORTFALLS
If your mortgage lender is chasing you for a debt left over when your house was repossessed or sold, there are time limits on claiming money owed, which vary according to the nature of the debt.

When the money owed is a mixture of the ‘capital’ part of the mortgage and the ‘interest’ part, the time limits for each are different. There is a 20 year limit to recover the capital part and a five year limit to recover the interest part.

[Curlyben]

Re: Complicated Secured Loan Issue - Advice Needed - Scotish Law

If the loan was taken out AFTER the sale, then it shouldn't have anything to do with you at all, as you no longer had any legal right to the security involved..

[Kipski]

Re: Complicated Secured Loan Issue - Advice Needed - Scotish Law

I agree, there would be no legal standing for the loan to be taken. Conversely, if the solicitors made a mistake during transfer there maybe some claim on their indemnity insurance possible. There is also the possibility that the creditor has breached rules by not defaulting the loan...

There are a number of ways that this could be argued I haven't even looked at the CCA yet but there may be errors on that yet...

I am trying to prepare as many arguments as possible here so that I have options once we begin with the creditor

I really need a solicitor to examine this, and will get one in due course. As I say, if anyone knows a good one?