The Repossession Process

A look at what happens when you fall into debt and fail to keep up to date on your mortgage payments. Including an overview of the repossession process.

People in todays society will have differing attitudes to debt and debt repayment. There will always be those individuals who take a very relaxed attitude to debt and debt repayment, however the vast majority will take the matter very seriously and in the case of property ownership, they will take any realistic action to make their mortgage repayments on time.

With the recent rises in the interest rates many people are going to struggle to keep up with their repayments. Individuals fall into arrears on their mortgage for many different reasons; accident or sickness, redundancy or unemployment, death of a spouse, insolvency or hikes in mortgage interest rates to name just a few.

The most common reason for property repossession in current times can be attributed to general high levels of consumer debt. This comes in two forms, secured and unsecured debt.

Whether this is due to the borrower making payments on their unsecured debts in priority over their mortgage or a level of mortgage borrowing taken out which their income cannot afford.

But how can a few missed payments on the mortgage lead to property repossession? Very rarely will a property be repossessed over an isolated incident of a couple of missed payments.

The advice given to borrowers who fall behind on their mortgage repayments is to contact their lender at the earliest possible opportunity. Speedy action on the part of the borrower can often reduce the potential arrears and put them on the road to recovery.

Delaying action is likely to result in increased mortgage arrears and ultimately could lead to property repossession.

Stage 1 Lender chases for missed payments. Initially your lender(s) will contact you in writing or by telephone to chase for missed payments.

Make sure you speak to your lender, and let them know what is going on, keep notes of conversations and get details of any new agreements you reach.

Stage 2 Lenders solicitor contacts you. If the arrears remain unpaid for a few months or more, your lender will refer your case to their solicitors to deal with.

You will need to talk to the solicitors and try and come to some arrangement, remember to get everything in writing from them.

Stage 3 Repossession Proceedings Generally after around 4 - 8 months or more of arrears, the lenders solicitors will issue Repossession Proceedings with the County Court. Once the court has received this instruction, a hearing date will be set.

If this happens you must complete and return the Court summons. Complete the reply form received from the Court stating your intentions e.g. that you wish to remain at the property.

Include as much detail as possible about your income and outgoings as the court will require evidence that you can meet the current monthly instalment and an amount towards the arrears.

Contact your lender and offer to pay the full regular monthly payment for the month together with a contribution towards the arrears. They may agree to suspended proceedings on receipt of these payments, provided they are received before the hearing date.

Make sure you attend the hearing. If you do not attend, the court has almost no alternative but to order possession against you.

Offer to pay the current instalment. If the court is satisfied that you can maintain the repayments, the Judge will grant a Suspended Order for Possession enabling you to stay in your home.

Stage 4 Court Order If you wish to remain in your home make an offer to pay the current regular monthly payment together with an contribution towards the arrears.

If the judge believes you can maintain this then a Suspended Possession Order will be granted enabling you to stay in your home.

There are a number of possible outcomes at the hearing, depending on your situation and circumstances of the case:

Case dismissed. This means the repossession has been stopped (i.e. the mortgage arrears have been paid off).

Case adjourned. If for some reason the hearing cannot proceed then a new hearing date will be set.

Suspended Possession Order. This means that if the current regular monthly payment is made, together with an agreed amount towards the arrears each month the possession order is suspended.

If however you default on the agreed terms of payment, the lender has the right to seek possession by Eviction or Possession Warrant without a further hearing. So make sure you keep up the repayments.

Possession Order. This is where your lender has been granted the right to possession of the property. This outcome is common where the judge has seen no attempt by you to make contact with the lender, the lenders solicitor or the courts, or where the judge deals that you simply cannot afford to meet regular payments or make a reasonable contribution to paying off the arrears.

Stage 5 Possession Warrant or Eviction Notice If you have defaulted on a Suspended Possession Order or are still in your property after your Possession Order date, the lender will apply to the court for formal eviction.

You will receive a letter from the court showing the exact date and time by which you must have left the property. This is often 7 to 14 days from date that the eviction notice is granted.

At the notified date and time, a court bailiff, representative of the lender and a locksmith will arrive at your property to formally take back control and possession of the property. You will have 10 minutes to collect your belongings and leave.

Generally, after 10 minutes the locks will be changed and you will be allowed one further visit to collect any remaining belongings after approximately 2 weeks.

It does not matter if you are elderly, sick or have a young family the bailiffs will still take your property.

The Options You Have.

There are a number of things you can do in order to save your property, these are.

# Negotiate revised terms. # Pay the arrears off in full. # Remortgage and switch lenders. # Sell your property. # Sell your property and rent it back.

The main thing to remember when being faced with repossession is not to bury your head in the sand but face up to your situation and take action, answer your phone, read the letters from the lender, contact the lender, etc.

You can rectify the problem but you do need to act quickly. Generally a bad credit remortgage will be the best way to stop the repossession, providing you have enough equity in the house.

About the author: James Copper enjoys writing on all areas of finance. He works full time for Adderson & Co. as a Mortgage Default Specialist.