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The Repossession Process
If you’re facing the possibility of repossession it’s unlikely that you’ve looked beyond the immediate risk of losing your home, but there are other implications you should know about. The mortgage company which has repossessed your home will sell it through an estate agent or via an auction, and you could be liable for the costs involved in this sale. There are cases where mortgage lenders have pursued people for the shortfall between the total cost of repossession and the amount the lender has been able to raise from the sale of the property. Repossession means that your name will be added to a ‘repossession register’. Once this has happened it is likely to prove very difficult to get a mortgage again in the future.

How Repossession Works

As soon as you miss one payment on your mortgage, you are in arrears with your Lender. They will send you a letter stating this and will ask how you intend to repay the debt. You need to call them and follow up that call with a letter. If your Lender doesn’t agree with your repayment schedule, you don’t contact them or you can’t afford to pay them back and you have missed 2 payments, then your Lender is legally entitled to start the repossession process.

The process starts when the Lender sends you a letter from their solicitor. This letter will advise you that if you don’t pay off the arrears within 7 days, or if you have not responded with an adequate proposal for paying off the arrears, then their solicitor will start court proceedings.

Possession Order

When the Lender gets no joy from you regarding paying back the arrears, they will go to court to seek a possession order. This is the start of the repossession process. The Judge will set a hearing date, which you should attend.

At the first hearing, the Judge will decide whether you can repay the Mortgage, on what terms and over which period. The Judge will normally give you a chance to pay back the arrears. Remember that the court’s view is that "Repossession is the last resort" and will explore all options open to you. The most likely outcome at the first meeting is to adjourn to a later date to allow for the collection of more information. A new hearing date will be set. If you can come up with an agreed arrears repayment schedule, then the Judge may issue a suspension order i.e. the repossession order is temporarily placed on hold. Be warned, if you fail to maintain the agreed payment schedule, then the lender can obtain an eviction order without further court hearings.

At the second hearing, the judge will only suspend the order if there is a change of circumstances e.g. changes in employment status, buyer for your house, etc. The buyer is normally required to pay off the arrears quickly and the house sold within 4 weeks.

Eviction Order

If in the Judge’s opinion you cannot repay the arrears and/or you will not be able to afford the ongoing mortgage payments, then the Judge will decide a date when you will have to leave your property. When the eviction order is enforced, the bailiffs will turn up at your door at the designated time, often with an estate agent to put your house on the market. If you are still in the property, they will give you 10 minutes to collect some essential belongings, then they will escort you from your home and a locksmith will replace all the locks on your house. If you think that not being in the property (e.g. by going to work) will stop the process, then you are mistaken. The bailiff is legally entitled to break into the property.

You will be entitled to a supervised visit approximately 2 weeks later to remove your possessions.

Other Options

The local Citizens Advice Bureau is a great place to get free advice and sometimes the counseling and help offered will be enough to get you back on the right track. If not, you may consider consulting a lawyer or an insolvency practitioner, but lawyers who specialise in debt management are usually found only in the larger law practices and charge on an hourly basis so whatever they do increases your debt. Insolvency practitioners are responsible to the Court for the final proposal and are obliged to act in the interests of your creditors.

What about Bankruptcy

Bankruptcy is an option, but it should always be your last resort. Negotiation is always better than opting to clear your debts by declaring yourself bankrupt, as this will have serious implications on your credit status for years to come.

What should I do now?

What you should NOT do is nothing!