Not upheld: debt recovery and statute of limitations complaint against Elderbridge Limited

Decision detail

Summary

Mr and Mrs C complained that Elderbridge Limited was pursuing a shortfall debt from a second charge secured loan and that they were being harassed. They argued the debt was statute time-barred under a six-year limitation period and that once their property was sold in 2017, the debt became unsecured. The ombudsman found that the Limitation Act 1980 provides a twelve-year period for principal sums on secured loans, and since Elderbridge made contact within this timeframe in autumn 2024, the debt was not time-barred. The ombudsman also found that the contact made was reasonable and not harassing, and that Mr and Mrs C had received numerous letters at their correct address but chose not to respond. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Limitation Act 1980, which provides a twelve-year limitation period for principal sums secured by mortgage or secured loan from when the debt becomes due. The shortfall debt arose in 2017, and Elderbridge contacted Mr and Mrs C within the twelve-year window in autumn 2024. Although the six-year limitation period for interest had expired, Elderbridge had already removed interest from the amount claimed. The ombudsman rejected the argument that the debt became unsecured after property sale, confirming that the twelve-year timescale applies to debts arising from secured mortgages or loans regardless of subsequent status. The ombudsman found the contact attempts were reasonable and not harassing, and that Mr and Mrs C's failure to respond to letters was their choice rather than a failure by the lenders to communicate.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website