UFO Sightings

Your account with your lender is “in arrears” when you have missed some mortgage payments for whatever reason. Once you are in arrears, having missed payments for a couple of months or more, your lender is likely to seek court action in order to take steps to regain ownership or “repossess” your property. If you fail to contact your lender and try to reach agreement, the lenders only option to get their money back is to take control of your property and sell it. They must do this through the courts.

The important thing to recognise as a homeowner threatened with repossession is that there are options to consider. If a lender takes action through the courts it does not mean that you will definitely lose your home. Refinancing your home may help, or you could always sell. Getting friends of family to help with the arrears is a further consideration.

Before you decide any drastic measures, the most important thing to do is to talk with your lender. Some lenders are more helpful than others, but help may include extending the term of the mortgage, switching to interest only from a repayment mortgage, or rescheduling the debt in another way. This may prevent the need to go to court. However, even if you can’t agree a suitable solution with the lender, the judge at court is more likely to sympathise if you can show you have tried to solve the situation and not hide from it.

Going to court, if matters reach that stage, may not be as daunting as you might think. Hearings about possession are held in private rooms in the county court with a judge. A legal clerk will be there to represent the lender and the hearing generally takes about ten minutes. There are no black gowns, wigs, public galleries, witnesses or a jury. Its your opportunity to explain what has caused your account to go into arrears and try to reach an agreement so that you can keep your home and continue to meet any revised payment obligations.

Generally speaking, a judge will grant you a suspended order if you can meet future monthly payments plus a small contribution towards the arrears, or you could offer to clear the arrears if you can gather the funds together to do that. A suspended order means you can keep your home provided you meet the agreed commitment. Paying off the arrears means your account is back up to date so the lender cannot repossess it. Other options such as refinancing or selling your home are only likely to gain extra time to get them through if the judge is satisfied that one of these options is sufficiently progressed and will be finalised within say four weeks.

Refinancing your home may be an option worth considering. However, in a repossession situation time is of the essence and the broker may not have any control over timescales or being able to guarantee you will be able to get the refinance you need. The fact that you are in arrears will also limit the availability of finance to you and the long term cost is likely to be very high. Selling your home is a further option but again beware that you will have very little control over the timescales and it may take time for an offer to be made and for the buyer to get the finance they need to buy your property.

If you are granted extra time at court, it generally comes in the form of a suspended possession order. This enables you to keep your home provided you meet the terms of the agreement set out in the hearing e.g. a commitment to make future agreed payments. Alternatively the judge may grant you an extra 28 days with a future hearing after that time to progress whatever solution you have proposed. If however you fail to win the verdict and the lender is granted possession you will generally have 28 days before eviction.

Facing repossession is every homeowners worst nightmare. However, recognising that their are options available and that there are organisations available to help you is important. What’s critical is taking some action and seeking help. Organisations such as Shelter, the Citizens Advice Bureau and the National Debtline are good starting points for advice, Make sure you are contacting these government supported agencies or charities and not some copy cat private enterprise.

Filed under: Finance