Handing over keys - Mortgage arrears

We took out a loan for E142,000 euros on a property in spain in 2005. However we were unable to keep up the mortgage repayments and handed our keys back to the bank Cala Galicia in November 2007. We had heard nothing since so assumed everything was ok.

We have today recieved a notification from a solicitors in England (Weightmans). They indicated that their client Fenix Cartera acquired from Cala Galicia all of its rights in relation to our account in August 2008. We heard nothing of this.

They ask that we contact them (Weightmans) as a matter of urgency in order to discuss our proposal for repayment. We do not know the full amount of the debt but we assume that we will be in negative equity.

What do you suggest that we do prior to contacting them ? Any help would be gratefully recieved as we havent go the funds to pay back the amount (with interest) and do not know how much the property is worth at this point.

Dear Sir/Madam,

Your case is very similar to this other persons:

Can we be chased by the bank after arranging a Dacion en Pago?
Unregistered

I believe you thought you had done a dación en pago en deuda, handing over the keys to your lender to waive any liability, but you have actually done something different.

What you probably did was just give them POA to sell the property on your behalf to a third party BMV at whatever price could be fetched which is detrimental for you. Any shorfall incurred in the sales price, you will be held liable for it both personally and unlimitedly with all your assets both now and in the future.

The above is NOT a dación en pago.

That's why I point out in my articles explaining the dación en pago that although hiring a lawyer to act on your behalf is not mandatory it is highly recommendable as the lawyer will have your best interests in mind:

The Dación en Pago Explained - 28th March of 2009

Dación en Pago Procedure - 21st November of 2008

We are going to increasingly read more and more cases like yours of borrowers who did not hire a lawyer and relied on their banks to act as their "lawyers".

You will now need to come to some sort of financial agreement with them otherwise they'll place a charge against your UK property and may even auction it off.

The whole point of following a dación en pago is discharging in full all mortgage liability and start off with a clean slate such as to avoid problems like this of being chased in the future by debt collecting agencies in your home country.

Yours faithfully,
Raymundo LarraÃ*n Nesbitt