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Foreign Property Debt: FAQs

5 June 20244 min readby Tom Miskelly

Loan Sales Property Debt Vulture Funds

In our latest webinar, we discussed one of the biggest questions we hear from foreign property owners struggling with foreign property debt:

“Can YOU be chased in the UK for foreign debts?”

We explored the legalities and implications surrounding foreign debts and what actions could be taken against you in the UK. Whether you are curious or concerned about this topic, our latest event provided valuable insights.

Below, we outline some of the burning questions you had for us…

“I have not drawn down my lump sum pension. Is it at risk with a foreign debt in the background?”

“Typically, no, but it is very important to know the details of the pension. In the UK, people typically keep their pension even in bankruptcy. What you wouldn’t want to do is draw down your pension the day you’ve fallen out with a bank. To ensure it is kept safe, however, there is a bit of timing and a bit of presentation needed. EU Property Solutions can help you with this, but invariably, it should be safe. Don’t hesitate to get in touch with us for more information.”

“What details do I have to provide regarding my asset and liability situation when faced with a foreign mortgage shortfall?”

“From our angle, when you’re talking to us, we need full transparency. Part of our mantra is we’re looking to protect any UK assets that are exposed. So, if you’ve paid off the mortgage on your house in the UK and you’re sitting on half a million pounds for the house, but you have a shortfall on a house in Almeria of €120,000, we need to be made aware of this.

We can inform our legal team in Spain of this and explain your need for asset protection. Using various methods, such as the 1135 Civil Act and any legislation, to support our work and protect you, we have several arguments to use. In Cyprus, we would make use of the DTA (Debt to Asset), where we hand the keys back to the bank, and a lump sum is paid to be discharged from the debt.

Overall, we need to know everything about your case. Then, it’s up to our legal team and us to work out how we can help you. If you go to the bank and discuss your case with them and make them aware of your substantial asset position, you will leave yourself very exposed. We have over 20+ people working across our two companies (EU Property Solutions/Bell & Company) which shows a little bit of magnitude of where we get our expertise from.

From our point of view, the professional presentation of your case is crucial. You may own a £500,000 house in the UK, but if it’s jointly owned and the other person’s not on the deeds and you can’t access any money because you’re a certain age, etc., we can build up a file on your case with your help. Every case is different. Therefore, every solution is bespoke.

“How is a negative equity property in Cyprus dealt with in my Will, and what is the executor of my estate’s role in dealing with such an issue?”

As an executor, their job is to manage someone’s estate after they have passed away. This includes handling all liabilities like credit cards and tax bills. Sorting out a property (in Cyprus, Spain, etc) is a significant commitment and requires immediate action if there are issues. It is hard to believe that someone might avoid resolving these matters and instead leave them for their will. Such a legacy is burdensome for the inheritors. It’s important to address these responsibilities rather than leave them unresolved. Even if you have personal reasons for holding onto the property. It’s not fair to leave such complications for others.

“How do I deal with a Spanish mortgage being pursued when my divorced husband will not engage?”

This is not a simple process. We can come to any number of settlements with the Spanish banks in different ways, but they need the involvement and engagement of both parties. The 3D’s (debt, divorce and death) are the worst things you can ever mix when it comes to foreign property ownership. This is very difficult, but there are a couple of things you can do to coerce them to the table. The divorce lawyer you used may well have outlined who was now obligated to deal with foreign property. Unfortunately, if it was a joint mortgage, both parties are responsible for it.

If you like this series of FAQs, click here to watch our webinar in full

If you have a question for us or would like us to review your documentation, call us on +44 (0) 371 705 3029 or email [email protected]

With a track record boasting a 100% success rate in resolving such cases, EU Property Solutions are your trusted ally in overcoming financial hurdles abroad.

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