Having to repay a debt from one’s assets is now “unfair”

One interesting consequence of the UK’s submission to EU laws sprang to mind when reading a free copy of the Nov 28th Mail on Sunday delivered to my Lanzarote holiday complex from snowbound UK yesterday.

On page 40 we read that a Mr and Mrs Chatterton, despite owing about GBP 250k on their Wiltshire main residence (a cottage worth about GBP 300k), purchased in 2004 a bolthole in Spain. They financed the Spanish holiday home with the aid of a GBP (equivalent) 145k loan from Banco de Sabadell.

The couple now face a forced repossession and sale of their Wiltshire main home since Banco de Sabadell is taking steps to obtain a European Enforcement Order that will fast-track a repossession order on the ground that the debt is “uncontested”. The sale will repay the first mortgagee (Halifax) and presumably yield enough to make up any shortfall between the value of the Spanish property and the loan secured against it.

The solicitation of the European Order is branded “Unfair” by the couple, their MEP (Ashley Fox) and the Mail on Sunday (Mary Synon and Jonathan Petre).

The undisputed facts, according to the article, are as follows:

  1. the couple have failed for about 18 months to make any payments on the Spanish debt;
  2. the Spanish property is now worth less than the outstanding balance of the loan
  3. there is equity in the Wiltshire home and the Halifax will not object to a repossession order since it is confident of repayment of its loan.

Why is this action branded “unfair”? The newspaper and the couple are aggrieved on two counts:

  1. The treatment, for purposes of EU law, of Spanish mortgage loan documentation as evidence of “uncontested” debt, and
  2. That the couple’s offer to hand back the Spanish keys has not been accepted as a full discharge of the debt by the Spanish creditor bank.

And so, as Europe and its banks (and hence its taxpayers) slide ever deeper into this vortex of debt, this newspaper and the local MEP appear to believe either that it is “unfair” that home owning debtors should be denied the benefit of years of procrastinating court proceedings before any repossession order be granted, or perhaps that it is unfair that they should have to dip into their own assets to repay a loan voluntarily taken on in 2004.

And why not just let the couple off their debt? In this bailout wonderland it is raining milk and honey for bankers and their shareholders, so why not also for customers?