Due to circumstance and threat of repossession have sold my property subject to contract. There is equity in the property but I also have an unsecured loan with Northern Rock, of which I am in arrears. Northern Rock have given me the impression they will take all the equity to cover some of the loan outstanding? With the loan being unsecured I didn't think they were able to do this? I have spoken to my solicitor who is handling the house sale but she doesn't seem to have a clue? Any clarity would be appreciated.

-- Sara Styles (sasakins@hotmail.com), July 15, 2004

Answers

I think you will find, somewhere in the paperwork for one or both of the accounts, that there is a clause relating to "offset" which basically means that if you have an account that is overdrawn and a separate account with the same bank/BS that is in credit, the bank/BS can "offset" the overdrawn account with funds from the account which is in credit.

Best way forward is to ask how Northern Rock seek to have a legal right to do what they propose and let them quote you chapter and verse. I am 99% sure you will find them in the right so long as they have this type of clause in their general account conditions and it would be a poor bank that didn't!!

-- David J. Button (davidjohnbutton@supanet.com), July 15, 2004.

Thankyou for your promt reply. Do you have any idea if they could still take the money if a repayment amount has been set by a CCJ? Court proceedings have just started and a CCJ wil probably be in place before exchange of contracts.

Many thanks

-- Sara Styles (sasakins@hotmail.com), July 15, 2004.

They must abide by the amount of the CCJ and the schedule for repaying the arrears and the ongoing mortgage monthly payment. However, when you come to sell, it is possible that they may use the clause I mentioned in my last post (if it exists that is) to recover the unsecured loan from out of the proceeds of sale in addition to the amount recoverable by the CCJ.

-- David J Button (davidjohnbutton@supanet.com), July 18, 2004.