Preventing Repossession - Steps You Can Take To Save Your Home

Published July 4th, 2008

by James Bailey

Missing mortgage payments and being threatened with repossession is every homeowner’s worst nightmare, yet every year thousands of people lose their homes. Lenders take court action to gain control and ownership of your property, so that they can sell it to recover the debt you have failed to repay. Your account is “in arrears” if you miss a mortgage payment, and generally after two or three missed payments lenders will start repossession proceedings.

Just because you have gone into arrears and your lender is threatening court action doesn’t mean you will lose your home. Often a solution can be found that is acceptable to the lender and you. Selling your property, refinancing it with the existing or another lender, or finding the money to pay off the arrears are just some of the possibilities.

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.

If things do reach court at a possession hearing then this is an opportunity for you to explain what has happened and how you propose to clear the debt outstanding. The hearing will be at a county court. At the hearing there will be the district judge and a representative for the lender. There is no jury and no oaths and no black gowns and wigs. You will sit round a table in a private room so its not as daunting as you may think. However, it is important to address the judge and not be intimidated by the lenders representative.

At the hearing the judge will be looking to identify what you can do to pay off the arrears and meet your commitment for the normal monthly payment. You could offer to pay off all or a significant sum towards the arrears. Clearing the arrears will mean the lender has no reason to possess the property. Another option is to offer to meet further monthly payments in full, with a contribution towards the arrears. In this case the judge may grant a suspended possession order allowing you to keep your home provided you meet this commitment. Whether the judge is likely to grant extra time for options such as refinancing or selling your home will be dependent on how far these have progressed.

When considering selling or refinancing your home as options to remove the threat of repossession, it’s important to consider that the element of control you have over them. With repossession looming, the amount of time available is short and therefore the more control you have the better. Refinancing will rely on the speed of a broker. Therefore shop around and get recommendations for a broker used to acting quickly for people in your situation. Selling your home will rely on a good estate agent that prices your property realistically and markets it well. You’ll also want them to check out the buyers financial situation before accepting an offer to reduce risk of the transaction falling through.

At the court hearing the judge may allow you to keep your home via a suspended possession order. For example, if the judge thinks you are able to meet future monthly payments in full, plus a contribution towards arrears. This will mean you must follow this plan and failure to do so will allow the lender to gain possession without the further need for a court hearing (though in practice you could request one). If you present options such as selling your home or refinancing it, then the judge will want to see evidence that this is happening and that things are progressing and that the lender will get the money due to them within 28 days.

Repossession is a worrying time, but the key is to get as much information and advice as possible. There are a variety of voluntary and charitable organisations available to you free of charge to guide you through the process, answer your questions and discuss your options with you. Such organisations include your local Citizens Advice Bureau, Shelter and National Debtline.

About the Author:

Author James Bailey has an excellent working knowledge of the repossession process and has helped a number of people save their home in the UK. Find more information, articles and obtain a full report on the repossession process at www.repossessionhelp.info