I Have a court hearing but am unable to attend. What shall I do?
Wherever possible, make every effort to attend. If you have a joint mortgage, only one party need attend. Your home is at risk – so making yourself available is paramount. If you absolutely cannot attend, set out your position in writing, and confirm to the court what you would like to do. iF you are running late for your hearing, phone the court and inform them, the judge will often wait or rearrange the repossession hearing for a later time in the day.
Do I need a lawyer to attend court?
No. You can get one, but they are expensive – typically £130 to 175 per hour plus VAT. This money is often better spent in an offer to repay the arrears. Some courts have Debt Counsellors available at repossession hearings that can help (some Citizens Advice Bureaus provide this service). Ask the court usher upon arrival.
The court has made an order for possession / eviction. Is there anything I can do?
Yes. You can sell your home quickly before repossession, or find a flexible solution which pays your arrears, prevents repossession and allows you to stay in your home. A Quick Sale can help you find a solution which meets these aims.
How quickly can repossession be stopped?
Repossession can be stopped right up to the date of eviction, depending upon your circumstances.
If I hand back the keys, is that the end of the matter?
No. The lender will sell the house. If there is a shortfall, the lender can recover this from you for up to 12 years (5 years in Scotland). Also, you will be responsible for ongoing mortgage interest payments until the sale and the cost of the sale itself. This will include locksmith costs, solicitor’s fees, surveyor’s fees, estate agency fees and utility bills. See our Tips following repossession page to see how you can minimise your liabilities.
Will my credit rating be affected?
Yes. A County Court Judgment will be registered against you, which will remain on the Register of County Court Judgments for 6 years. The lender will also register the repossession on the Council of Mortgage Lenders register which will make obtaining a future mortgage very difficult.
There is a good chance we will not be able to pay our mortgage next month. What should we do?
Check whether you have a mortgage payment protection insurance (MPPI) . This should cover the monthly payments, at least for a year, giving some breathing space to address your financial dilema. Talk to your lender and explain your situation. If you have a flexible mortgage you may be able to take a payment holiday. Ensure you get any social security help that is available and claim any available allowances (unemployment benefit).
Draw up a proper budget listing all your income and outgoings to help evaluate your position. It may also be necessary if you need to get debt counselling.
What are the options available if I cannot afford my mortgage payments?
Talk to a mortgage broker to see if there is a lower cost alternative. Otherwise your lender may be able to offer different repayment options. Although these may reduce monthly payments in the short term, you may end up paying more interest over the total loan as a result. The most common options are: granting a limited payment holiday, reducing monthly payments for a set period, reducing monthly payments by extending the term of your loan or switching from a repayment basis to an interest only mortgage. If you take the latter option you will need to review at a later stage how you are going to repay the capital sum at the end of the mortgage term.
It is clear I can no longer afford my mortgage. Should I just hand the keys back to the lender or should I sell the house myself?
You should not hand the keys over without getting independent advice first. If you do, your debt will probably increase and your name will appear on the mortgage repossessions register making it difficult to get a mortgage in the future. It is better to talk over the options with your lender or mortgage broker.
I have missed a couple of mortgage payments and my lender has written to me. What happens next?
Usually the lender will send a letter after you have missed one or two payments and they will ask you to confirm how you intend to pay off the arrears. If you fail to respond or the lender is not satisfied by your answer another letter will be sent giving you seven days before solicitors become involved. It is better to negotiate with your lender before solicitors. A Shelter housing aid centre or citizens advice bureau can help you do this.
Our mortgage lender has sent us a solicitor’s letter threatened to take us to court because of arrears. What are my options?
You must make contact with your lender and try to sort it out otherwise they are likely to go to court to get an order for possession. If that happens you can attend and could still stop proceedings by coming up with an acceptable offer to clear arrears and maintain payments but you will need to produce evidence to support your proposal (like the offer of a new job). Court costs and those related to bailiffs – if they are appointed – will be added to your debt.
We have been told that bailiffs will be sent to our door. Do we have to let them in?
A letter from the bailiffs will give you seven days to vacate the premises. In a repossession case bailiffs can use any means to enter the premises including reasonable force. They will evict anyone living in the house and change the locks to ensure you cannot get back in.
If we are evicted, what happens to our possessions?
The lender has a charge over the property, not the contents. They must reach an agreement with you so you can collect what is yours. However, if possessions are still in the house when the bailiffs arrive they are removed and left outside the house.
Property prices in our area are falling so even if we are evicted from our home because of mortgage arrears, the sale of the property is unlikely to pay off all we owe. Can we be pursued for the difference?
You can be chased for twelve years from the date of the first mortgage default. However an informal agreement between members of the Council of Mortgage Lenders means they will not pursue after six years.