In the red from out of the blue

The Nationwide has been challenged to either bankroll a test case on how long lenders can chase old mortgage debts or to drop their demands to a former home owner.

Neil Lampert, from Ramsgate, Kent, was "pole-axed" by an out of the blue a demand for nearly £46,000 from Nationwide's lawyers for a debt on a property he had been forced to leave nearly 10 years ago.

The lender said it had 12 years to collect the outstanding amount - far more than the £38,000 he borrowed to buy the one-bedroom flat.

But the local newspaper journalist discovered that debt experts at the National Association of Citizens' Advice Bureaux believe there may be a case for the right of home loan companies to pursue debts to be limited to six years, in line with other outstanding sums, rather than the 12 years they currently claim.

And among his close acquaintances he discovered others who were suddenly faced with huge bills from properties they had lost through repossession or by handing in the keys up to a decade ago.

"Across the UK, tens of thousands like me are being excluded from financial services because they were persuaded into errors of judgment 10 or more years ago," he says, "and were forced to give up their homes to mortgage lenders. Now we are being chased for money we can't afford."

Mr Lampert's solution is for the Nationwide to take a leaf from the Equitable Life's book. Faced with angry policyholders over the guaranteed annuity issue, the pensions company decided to pay for a test case involving a "representative" of those affected. Equitable won its case a week ago, but it is now paying for the appeal.

Mr Lampert says he would be happy to volunteer to be taken to court by the Nationwide to settle how long it can chase debts.

"No one who is affected as a repossession victim can afford to take a lender to court," he says. "So any doubts over the legal powers they claim cannot be tested. If the Nationwide and the other lenders are right, they have nothing to fear. They can hire top lawyers and I can't."

In addition, he wants the courts to rule on whether banks and building societies were guilty of mis-selling home loans a decade ago.

He claims that he was not warned that interest rates could go up, pushing monthly payments out of his grasp. Nationwide says it would have expected Mr Lampert to "have made an allowance for this given that in the year or so before he took out the loan, rates had risen by one third".

He counters: "I knew nothing about economics, I was living with my parents, and lads in their early 20s have more interesting things to do than watch mortgage rates. I relied on the building society for any guidance I received."

He took out his Nationwide loan before there were statutory wealth warnings on mortgage adverts telling borrowers that their home is at risk if they fail to keep up payments. He also claims that many lenders were reckless in making it easy for first-time buyers to borrow.

Mr Lampert, who is blacklisted for credit and relies on cash, gave in the keys to his flat in Westgate-on-Sea, Kent, nearly 10 years ago. It was bought with a £38,000 loan but he now owes, say solicitors Eversheds acting for Nationwide, "£45,847.98 without the addition of interest or costs". As in many other cases, it was the first he had heard from the lender in a decade although he made no attempt to hide. "I have an unusual name and my byline is in Kent papers every week," he says.

He is also angry at being treated less favourably than one-time criminals, who can rely on the Rehabilitation of Offenders Act to give them a fresh start. This week, a woman who was convicted of defrauding banks and building societies of more than £250,000 was given a two and a half year sentence - which will disappear from her record in 10 years, while home loan outfits can punish former borrowers for longer.

Despite having good jobs, they cannot borrow to buy homes; no bank will give them a personal loan; and they are denied the convenience of credit cards.

Says Mr Lampert: "I was told by Nationwide's local manager to hand in the keys and the case would be closed. But the demand might as well be for £46m for all the chances it has of getting money from me. And even if it tries try to grab my earnings or raid what little savings my wife and I have, it could end up putting the pair of us on the street as we won't be able to pay our present housing costs.

"My real concern is the morality of what it did to me and many more like me. I'm still paying for a mistake I made nearly 10 years ago but it is also a mistake that I would not have made if I had received sensible advice from the Nationwide."

Not having a credit card excludes him from mundane tasks colleagues take for granted such as booking concert or cinema tickets over the phone. He does not have a car as no bank will give him a personal loan. And he cannot have a mortgage although he is now able to contribute towards house purchase as his wife has been able to find a property loan in her own name. "I have very little in the way of material assets whatsoever. My friends borrow to acquire things. I can't," he says.

Besides his anger at being treated worse than many convicted criminals, Mr Lambert also wants to tackle the Nationwide on why it allows its debt chasers to demand money without showing how they calculate the amount.

He says he cannot understand how the £38,000 loan grew to nearly £46,000 without charges or interest when the Nationwide sold his flat in 1993. "It has taken a lot of phone calls to discover that they sold it for just £14,000 when I had paid £40,000 for it. If it was so overvalued in the first place, they should not have lent on it. And if it was the correct price, they should have waited until they found a buyer. They could have rented the place out instead of leaving it empty," he says.

Nationwide says it has to pursue former borrowers to help preserve its members' money. It presumes Mr Lampert "entered into the transaction after careful consideration" and on the basis that he could "service the loan".

But the Nationwide does concede that its "credit appraisal process was not as sophisticated as today", although "it was in line with the industry".

And Eversheds says its first letter, with the near £46,000 bill and seven-day reply period, was not a demand for payment, but an invitation to discuss the matter and make "a settlement arrangement via a discounted sum".

The Nationwide, which has not yet decided whether to accept Mr Lampert's challenge, says it is willing to discuss the matter with him and agree an affordable sum.

"Most debtors pay up. We can't wipe off amounts as that would be unfair to other members," the society says.