Property Repossession Process

Property repossession is something that any homeowner fears. As a result of the global economic crisis, more and more people are losing their jobs and consequently their homes. In the UK alone, the property repossession rate has nearly tripled in the last ten years. The truth of the matter is that no one will fully understand the stress and trauma of property repossession other than a person who has already gone through one. That’s why it would be helpful to know and understand the process of property repossession so that you can be prepared if ever you are faced with this financial dilemma. If you have missed mortgage payments on your house, your mortgage lender has the legal right to start the repossession process.

1. First, they will send a letter as a reminder for the missed payments. It is best not to ignore these letters and get in touch with your lender. Be upfront and honest with your lender of your current situation so that they are reassured that you have every intention of settling your arrears. Hopefully, this will be taken positively by your lender.

2. If you have a good credit history and it is your first time to fall behind payments, your lender will most likely give you payment extensions. You can come to an agreement with your lender on how to pay off your arrears while still paying the monthly mortgage. Some lenders will agree to be paid in installments; however, the arrears might still be subject to high interest rates.

3. However, if payments are still not settled, your lender can now send another letter informing you that solicitors will now be contacting you to settle your account balance and arrears. A litigation or collections department will now review your case and perhaps set up a repayment scheme. Solicitors will usually send a letter demanding you to pay your balance within a certain amount of time, which is usually a week.

4. More often than not, solicitors will be demanding full payment of your arrears. If payments have not been made or a special payment arrangement has not been agreed on, your mortgage lender can now start court action to repossess your property.

5. Your lender will apply to the court for possession of the property. A notice of 21 days will be sent to you to appear in court. A ‘particulars of claim’ form will also be sent to your which explains the reasons for eviction and property repossession. Furthermore, the court will require a defense form to be completed. This gives you, the borrower, the opportunity to explain in writing your current financial situation and the reason for missed payments. You can also indicate your plan on how to repay the arrears. While waiting for the court hearing, it is best to try to pay off as much as you can on the arrears. Negotiate with your lender with other payment options. You must also prepare your financial records to be able to show in court the reason for the missed payments. Alternatively, you can also ask for time to prepare for the hearing and an adjournment can be called for in the event that you have been ill, delays in receiving the summon letter from the court or have had a change of circumstances which will allow you to settle your arrears. You can keep on trying to make a special arrangement between you and your lender right up until the date of the court hearing.

6. A court hearing date is usually set for Possession Proceedings and your presence will be summoned in court within six months of the first arrears. A court hearing will now be held to repossess your property on the grounds of breach of contract. Your mortgage lender will present the court with details of your arrears so it is best to regularly attend these hearings. If you do not attend the hearings, this will be construed as lack of interest in settling the missed payments and the court will have no choice but to rule in favor of the lender.

7. Before a decision is decided upon, the court will have to make sure that every option has been explored by the lender and borrower to settle the financial dispute before property repossession. This gives an opportunity for the borrower to make a last ditch effort to save your house from repossession.

8. The court can decide to adjourn the hearing to a later date if evidences are insufficient. If you are able to pay off your arrears, the hearing can be dismissed. Alternatively, if you cannot pay the arrears in full instead though monthly installments, repossession can be suspended until the time comes that you are able to pay it all off. If the judge decides in favor of your lender, your property will be up for repossession. A date will be set for you to completely move out of the house and a bailiff will come and lock up the property. Generally, you are given 28 days to voluntarily move out. At any rate, one must not fear being imprisoned as this is only a civil case and not a criminal case.

9. If in the event you have a suspension order but you are not able to make special payments in the agreed timeline, the suspension order will be lifted and there will be no need for another hearing. A bailiff will come to lock your property. You will be given an eviction order to vacate the premises. Even at this point, you should not lose hope in saving your property from repossession. You can still try to pay off some of your arrears and make a special arrangement with the remaining balance. Alternatively, some people try to sell their house quickly even at discounted prices just to avoid property repossession. Some also opt to rent their house from the new owner, saving moving expenses.

10. Once the property has been vacated, the locks will be changed to make sure that you are not able to get back inside. If in case you are not able to move your furniture and belongings from the house, you can make an arrangement with the lender to get them in a later time. Utilities such as water, gas and phone line will be disconnected. Furthermore, the local police will also be informed about the repossession. The property will be sold in auctions to repay your mortgage, and if the sale is not sufficient to cover all expenses, you will still be held liable for the remaining balance.

Property repossession is indeed a very difficult, expensive and time consuming process to go through. The process will also differ from different country to country but basics of the process are very similar. It is very important to understand the property repossession process as it will give you options and suggestions on how to successfully avoid or face this financial dilemma.

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