Help! I’m Being Repossessed

If you are being threatened by repossession the first thing to do is to assess just exactly how much time you do have to sell.

The repossession process normally takes several months, particularly at a time like now where there is regulatory pressure on Lenders, who must show forbearance and only use enforcement of security as a last resort.

The Banks also know that if they do repossess your property now, and you have little equity, they will end up re-selling it for less than your outstanding loan to them – so they are likely to give you more time on the basis that if they do repossess in the future, the value will probably have risen.

A Lender will usually only instigate repossession proceedings if you are at least two months in arrears, and have been unable or unwilling to agree a repayment plan.

It is important to talk to your Lender if you are concerned about the threat of being repossessed.

They will often allow you to make interest only payments, or even reduced payments that don’t cover the full amount of interest due. These are often good solutions if you expect your financial difficulties to be temporary.

Even if you receive a formal notification from the Lender that they intend to commence repossession proceedings, you still have some time (typically at least 3 months or more).

The repossession process

  • The Lender submits papers to the County Court who will list the matter for a Possession Hearing – approximately 6 weeks.
  • You should attend the court hearing and ask for more time, and agree to make the next payment as agreed at the hearing – 4 weeks. Note: The Judge will make a Suspended Possession Order, which means that if you continue to make the agreed payments each month, the Possession will be suspended until or unless you miss a payment.
  • If you do not make the next payment, the Lender has to apply for a Warrant for Possession – approximately 2 weeks.
  • When the Warrant for Possession is issued it will state the date by which that you must vacate the property – approximately 3 weeks. This instructs court bailiffs to evict any tenants who have failed to vacate the property within the time given to them by the court under the terms of a possession order.

What are your options?

With 3 or 4 months available to you, it is still possible to sell your property before the repossession proceedings are concluded.

The best thing to do is to put your property on the market at the lowest price you can accept and make the property as attractive as possible. You might not have any funds to improve the property but making sure it is sparkling clean, and the garden is tidy, will help you to sell it.

Of course your other option is just to allow the repossession to take place.

If you decide to go along with this, you need to be aware that any shortfall between what the Mortgagee sells the repossessed property for and what you owe, plus the legal costs of repossession and the Estate Agent’s fees for selling the property for the Lender, are still owed by you, and the Lender can pursue you for these.

In theory they have up to 12 years to do this, although most Lenders are part of the Council of Mortgage Lenders (CML) and commit to inform you if they intend to do this within 6 years. There is some useful information on this here: http://www.cml.org.uk/cml/consumers/guides/debt

On the other hand, if when the property is re-sold and fees are deducted there is a surplus, the Lender will forward this to you.

Whilst your credit record will already be affected by missing mortgage payments and having judgements in the court, repossession will further affect your credit rating so you need to weigh up how much this is a consideration for you when deciding what to do.

Your next home

If your home is likely to be repossessed you need to think about where you will move to next.

For most people, renting is the next step. This might be difficult though if you do not have sufficient funds to pay a month’s rent in advance, plus a Bond, often the equivalent of 6 week’s rent. Also your poor credit record will disqualify you from many properties.

If you are planning to rent privately it is a good idea to look for somewhere about a month before you need the property. Be upfront with the Agency or Landlord about your situation. If you can get a friend or relative to act as a Guarantor this will help.

Depending on your circumstances and income, you might be able to claim Housing Benefit. If this is sufficient to cover the rent, then the Landlord or Letting Agent might be happy to take you if the payment is made direct to them by the Council.

If you can’t afford to pay rent in advance and don’t qualify for Housing Benefit, you may be able to stay with friends or family, although for most this can only be a temporary solution.

Other options are to contact your local council and apply for council housing. Some councils have long waiting lists however. The council will usually give you an estimate of how long you should have to wait.

Council housing is not allocated on a “first come first served” basis. Most use a points based system that prioritises, for example, families with young children.

If you are unable to find accommodation, your local council may have a duty to house you. This will depend on your circumstances. You can find some excellent information and advice here: http://england.shelter.org.uk/get_advice/finding_a_place_to_live
 
 

By Richard Watters

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