Could Your Home Be Repossessed?
News reports and economic analysts tell us that repossessions are on the rise again, as the combination of more expensive credit and worrying signs of economic slowdown begin to make some homeowners unable to meet their commitments.
Repossession really is a nightmare for those involved, and even should your home be seized and you and your family evicted, you may still find that your debt problems aren't over as a depressed housing market means that your home may not sell for enough to clear what you owe.
It must be said though that even when repossession rates were running at record highs during the 1990s, the proportion of families who actually ended up losing their homes was still tiny. Nonetheless, repossession is a deadly serious business and if you're heading in that direction then you need to seek advice from a debt counselor urgently if you're to stop the process.
What Causes Repossession?
The first point to note is that unsecured debt such as credit card balances and the like are not a direct threat to your home unless the situation is grave enough to threaten bankruptcy.
Government tax debt can be legally cleared by repossession, but by far the most common reasons why repossession proceedings begin is having serious arrears on either a mortgage or a secured loan.
Mortgage lenders would really rather not repossess someone's home - it's bad publicity, it's expensive, and it's a lengthy process. They'd far rather come to an arrangement with a customer in financial difficulty, so always contact your lender as soon as you realise that you can't make a payment.
Also, the whole repossession process will take around 6 months from falling into arrears to actually being served with an order, and so there's ample opportunity to negotiate with your lender and try to come to an agreement.
The Repossession Process
The first step towards repossession is the sending of a letter from your mortgage company informing you that you are behind in your payments, and asking you to contact them to explain what you intend to do to remedy the situation.
If you don't respond within a reasonable time-frame, you'll be sent another letter underlining the seriousness of the situation and warning of possible legal proceedings if you don't make contact.
If you ignore this, a solicitor's letter will be sent giving you 7 days to contact the lender and make an acceptable proposal, or court proceedings will begin without any further notice.
Once it gets to court it's important to bear in mind that the judge has the power to immediately grant a repossession order if he considers the situation to warrant it. It's more likely, however, that the judge wll attempt to broker an agreement between the debtor and the creditor which will avoid the need for repossession. This is especially true if children are living in the property in question.
Whatever the judge's unwillingness to grant a repossession request lightly, if all else fails it will certainly come to this. There will, however usually be one last chance to avoid losing your home as not all orders are acted on immediately, rather being held in reserve by the lender to ensure future payments are made and arrears cleared in some way, even if this takes a long time.
Related Articles:
- Should I Hand Back My House Keys When Facing Repossession
- Can Unsecured Debt Cost You Your Home?
- What If You Can't Pay Your Mortgage?
- Avoid Repossession with Sell and Rent Back
- What To Do If You've Missed A Mortgage Payment
- Negative Equity
- What Are Charging Orders?
Site is for information only and does not constitute financial advice. E&OE.
