Personal Loan Obligation
A mortgage necessarily implies a loan. There must be some underlying actual or contingent liability to pay or repay money. If at any time, there is no actual or contingent debt, the mortgage may be redeemed and released.
Claims for payment of money may be brought separate from or in addition to the enforcement of the security. A legal action for payment of a loan obligation can be maintained against any one of a number of joint borrowers. If there is a guarantee, the money may be demanded from the guarantor in the event of non-payment by the principal borrower.
The loan agreement arising from the loan offer will usually set out the terms of the credit. The monies may be payable in installments or on demand. Installment payments is normal with a buy to let mortgage. The whole monies will typically become due, if there is an event of default under the loan agreement. A formal demand may be necessary as a precondition to the entitlement to take legal action to recover the loan monies.
If the loan is by an Irish bank to an Irish based borrower, the legal action to enforce the mortgage debt may more appropriately be taken in Ireland. However, any legal action which involves enforcement of the mortgage security situate in England or Wales, must be taken in the England and Wales courts.
Debt Collection Procedure
The England and Wales Civil Procedure rules set out the procedure in claims for a sum of money. See our England and Wales Litigation Guides.
The claim form is prepared by the claimant’s solicitor and sent to the Court Offices which formally issue it as a legal document. The Court office itself usually serves the documents on the respondent/defendant by first class post. A person making a claim or a person who is the defendant must give an address for services within England and Wales.
It will generally be necessary to complete a witness statement exhibiting the mortgage or charge. The particulars of principal, interest and other sums due etc must be proved. Details the of amounts advanced, repayments and interest charged must be shown.
Where the mortgagee has a right to recover costs under the loan agreement, it is not necessary to apply for an order of costs. If the mortgagee is required to pay the costs, then an application for an order of costs should be made.
It will usually be the position in debt collection cases, that the defendant will have no valid response to the claim. In this case, the claimant is seeking a court order so that it can be enforced against the respondent debtor.
There is a special procedure for obtaining a court order (or “judgment”) in default of an appearance or substantial defence by the respondent in debt collection cases. Where a claim has been made and the defendant has neither acknowledged receipt or filed a defence within the relevant time limits, it is possible to obtain a court order through the Court offices without a formal hearing or procedure.
When a defendant receives a claim he must respond in order to avoid a judgment and order being made against him by default. Generally, the defendant must answer the claim by either acknowledging receipt setting out a full defence or admitting the claim in part or in full within certain time limits. If the defendant simply acknowledges receipt, he must within 28 days of the original claim set out details of his defence. The defence sets out the facts and circumstances by which the defendant claims that the claim is denied in full or in part or is not valid.
Where a claim has been made and the defendant has neither acknowledged receipt or filed a defence within the relevant time limit, it is possible to obtain a court order through the Court office without a formal hearing or procedure. There are procedures whereby a defendant can later apply to Court to have the default judgment set aside. It will be necessary to show that there were actual grounds for disputing the claim.
Where the judgment is for a specified/certain amount a Court will normally give judgment for the amount due. Where the amount claimed is unspecified, it must be judged and determined by the Court in a disposal hearing before a Court Officer or the judge. He or she will determine the amount of the claim.
Defendant Responds
It is possible for a defendant to admit part of a claim and dispute the rest. When the claim is submitted the defendant must give personal details and should he make an offer of payment, he must set out whether he is offering to pay in full or by installments. Under these circumstances he must set out his income and expenditure, so that the Court can consider whether his offer is reasonable.
If the claimant accepts the defendant’s offer, he can apply to the court so that the offer will become an order of court. A court order is enforceable against the defendant in a number of possible ways. If the claimant rejects the offer, he can apply to the Court for what he claims is the appropriate order as to lump sum payment or installments etc., If the claim is for less than £50,000.00, a Court Officer rather than the Judge, will decide the rate of payment, without a court hearing.
Court officers or the Judge may make a decision, without any hearing. If a hearing is requested the parties must be given seven days’ notice. The Court takes into account the defendant’s means, statement of means, the claimant’s objections and other relevant factors.
