Loan Sales, Vulture Funds & Third Parties
As Spanish lenders struggle to recover money from borrowers, they are increasingly resorting to loan sales. They sell large quantities of loans to third parties for a very low cost. These third parties are also known as ‘vulture funds’.
The key difference here is that vulture funds are more aggressive, more persistent and more efficent when it comes to recovering debt. They are more difficult to deal with and ultimately, this could end in a worse outcome for you.
Read on to find out more about vulture funds and how to deal with them.
If you have missed payments, defaulted on a mortgage or abandoned a property in Spain, then your mortgage is what is known as ‘bad’ or ‘delinquent’ debt. There is a huge amount of this ‘bad debt’ across Europe, most of it remaining from the 2008 financial crash. It is especially common in parts of Spain and Cyprus.
As a result of this being commonplace, banks are not equipped to recover these debts efficiently, so they employ third parties to do this for them. The worst form of this is loan sales. Large third-party recovery companies buy debt for a very small amount and then recover it to make a profit. These groups are commonly known as ‘Vulture Funds’ and operate across Europe and most of the world.
Has my loan been sold to a vulture fund?
Many homeowners have pushed their foreign property debt to the back of their minds and tried to forget about it. Therefore, this explains why so many are surprised when they receive correspondence from a vulture fund asking for repayment in full, plus interest and other fees that have accrued over time.
When your debt is purchased, you will receive a letter and/or an email confirming this and demanding repayment. These communications are designed to sound as threatening as possible. However, if no home address is available, these may be sent to your Spanish address. As a result, you may not even be aware of the sale. However, these companies will go to great lengths to track you down.
Should I be Worried?
As mentioned above, vulture funds are very good at sending letters that sound and look extremely threatening. So, it is only natural to be worried after receiving one.
Generally, vulture funds are more difficult than traditional lenders when it comes to debt recovery and negotiation. This is for a variety of reasons, including:
- They are more persistent and will not stop until you have paid them
- They employ much more aggressive techniques to recover debts.
- They operate more efficiently across country borders and will issue judgements in your home country.
- They will continue to add charges and additional fees to the original debt.
- They can be harder to negotiate and achieve a settlement with, but it is possible, with the right help
Because of their effectiveness at recovering debt, things can move very quickly once a vulture fund purchases your debt.
How can vulture funds recover debt?
The processes used to recover debt are similar to European banks however, as mentioned, they are used far more efficiently and swiftly.
The fund will ask for full repayment, in the very likely scenario that you cannot pay this, they begin recovery proceedings. At this point, it is likely that the lender or vulture fund has repossessed your property, so recovery action will be in your home country.
Once the vulture fund has secured a judgement in your home country, they will really begin to attack. This can see your home and other assets become at risk of repossession. They will often employ a UK-based legal firm to act for them. This will see costs rise and interest will continue to build.
Find out more about being chased for debts in the UK.
What you can do
The longer vulture funds are ignored, the more difficult they are to deal with in the long term and much more difficult to settle with. As with all property debt issues, getting the right advice early is the best option.
EU Property Solutions have been helping borrowers for over a decade. We understand how vulture funds work and, more importantly, how to deal with them. This helps us to get the best possible settlements for you.
You can call us on 0330 124 1230 or email [email protected] to get a free case review and hear your options today.
Can My Debt Be Sold?
Unfortunately, your lender does not have to follow any processes or ask your permission. Once you have missed payments or defaulted, your lender can do as they please. This includes selling debt, recovery action or employing collection agents.
Can I Ignore Vulture Funds?
If you ignore a Vulture Fund, you can expect them to become less receptive to offers down the line. The situation will also have progressed, making it harder to halt legal action & negotiate with your best interests in mind and finally, they will become more likely to chase you across jurisdictions.
Why Should I Trust EU Property Solutions?
For over a decade, we have been helping people in exactly the same situation you find yourself in. We understand that the bank, developers, and estate agents have all lied to you. If our amazing results don’t say enough for themselves, check out some of our testimonials or call our office and speak to a team member. You can even chat with previous clients of ours over the phone!
Why not get in contact?
We are always happy to offer a free, confidential review of your situation.
This helps us understand exactly what you need and helps you understand the best options to solve your property debt issues.