When it comes to foreign property debt, you can imagine the number of enquiries we receive from potential clients who are concerned with their situation, however, the most common question we receive is:
“Can a foreign debt be collected in the UK?”
The answer unfortunately is, yes. A lot of people who purchased property abroad are under the assumption that once you ‘hand the keys back’ or no longer pay your mortgage and go back to the UK that you are no longer liable, this is not the case and cross-jurisdictional pursual tactics are on the rise, more so now than ever. But what are the methods and tools used by Banks to collect debts in the UK? It is important to understand what you are facing if you’re in this predicament, in this article, we will be looking at some of the common practices employed by lenders to collect debts in the UK.
If you would like to find out more about overseas debt bring enforced in the UK, read our previous article.
Out of sight, out of mind?
Sadly, this saying doesn’t apply when it comes to foreign debt. Many people have been given advice that leads them to believe they can stop paying their mortgage, leave their property or hand back the keys and face no consequences. However, we can assure you this is not the case. If this is something you have done you’re probably asking yourself what action the Bank could take against you…read on to find out.
European Enforcement Order
EU Law created this easy approach to collecting debt across member states. Many thought that a foreign debt could not be collected in the UK after Brexit but, these laws still apply to the UK. They can be used by lenders in any other EU member states, including Spain and Cyprus.
This order means that your debt will be recognised in the UK and will open the door to allow your lender to apply to courts in your home country. This can result in a County Court Judgement or a Statutory Demands being issued against you.
Often, instead of pursuing you themselves, the lender will appoint a solicitor in the UK to do the ‘heavy lifting’. They will approach the situation in a very similar way, usually using:
- County Court Judgments (CCJs)
- Statutory Demands
- Bankruptcy proceedings
- Charges on your UK property
The key difference here is that these UK-based legal firms are much more aggressive and persistent in their pursuit. European Banks are slow and clumsy when it comes to recovering their money but, plenty of these legal firms have teams dedicated to UK debt recovery. They know their work and have the stamina to continue hounding you.
Vulture Funds/Loan Sales
This option is becoming extremely common as European lenders look to get rid of some of their ‘bad debt’. It involves the sale of your mortgage to a third-party company, a few of the well know names include:
- E&G Solicitors
- Pepper Finance
- LCS Debt Recovery
Often, you can go years, or even decades, without hearing from your original lender. So, it can be a nasty surprise when you get a letter through the door informing you that your loan has been sold!
There are a few reasons why vulture funds need special care and attention:
- They are more commercial and more aggressive than traditional lenders
- They are harder to negotiate and settle with
- They can change the terms of your loan agreement
- They are better at recovering cross-jurisdictionally compared to Banks
If you have left any outstanding property debt in another country, it is very likely your lender will use one, or a combination of the above to recover your foreign debt in the UK. This could put your personal finances, assets and pension at risk.
It is not all doom and gloom. EU Property Solutions are experts in protecting your UK finances from foreign banks. Over the past 10 years we have saved our clients over £13 Million in property debt issues. If you are worried about a foreign property or would like advice on your situation, you can contact us for an obligation-free call on 0330 124 1230 or email us at [email protected]