House repossession happens when an individual or institution has rightful ownership of a property and reclaims it from the party that has rightful possession of it. As one could imagine, this process is not a very pleasant experience and isn’t something that happens swiftly. It is a long process having several stages and there are various requirements that have to be met before it is all said-and-done. It can be a very stressful situation, to say the least, if you are undergoing house repossession and can affect you with a plethora of negative emotions. Moreover, your credit is bound to take a massive nosedive and will stay that way for quite some time.
As stated earlier, house repossession is not a fast process and typically involves five separate stages. In this article, we are going to cover these stages in great detail so you will have a better understanding of how the process works, as well as some steps you can take to prevent this from happening to you. Believe it or not, there’s plenty you can do to prevent or, at least, delay this from happening. There’s a great deal of information to cover so let’s get started.
The first stage is fairly straightforward. When a borrower or debtor falls behind on mortgage payments, the lender or creditor will send a letter notifying how much money is owed and will request the debtor to pay the arrears in full or within a specified time-frame.
If the letter is not replied to, the creditor will, undoubtedly, be less than thrilled and will send another letter. Typically, the second letter will notify the debtor that the creditor is planning to take legal action. This letter is commonly called a Notice of Intended Prosecution. This is usually followed by the creditor filing for a possession order with the local court.
Many people make the mistake of simply ignoring these notices and thereby, let a resolvable issue get out of hand. It is during this time that the situation can actually be controlled because creditors are typically more understanding and willing to work out some type of payment arrangements to bring a delinquent account back to good standing.
However, in those cases where the situation has already escalated, thankfully, there are some steps the creditors have to complete, by law, that will afford you some time to come up with a plan.
If facing house repossession, the court summons will:
Once the application for possession has been submitted by the lender, the court will notify you, in writing, of basic details regarding the lender’s claim. You will be provided with the time and date of the hearing. Along with the notification, you will receive a reply form. It is extremely important that this form is filled out correctly and returned to the court. If you are trying to repay your debt by selling your house, it is possible that the courts may delay the hearing and allow you more time to resolve the issue.
Once the hearing date gets closer, you will receive an affidavit that will have details regarding the claim. This is a legal document that will contain information such as the outstanding balance, interest rates, payment details and other terms and conditions involved in the mortgage.
You can go to www.hmcourts-service.gov.uk for further information and to download copies of these court forms.
The hearing itself is not a public event. The only people present at the hearing are the two parties and the judge. If facing repossession, the judge will first review all the information and evidence provided by your lender or your lender’s representatives and then give you a chance to plead your case. Once you do, the judge will take everything into consideration and will then afford you a chance to pay your arrears or suggest an alternative as to how the mortgage will be repaid. The courts consider taking someone’s home to be the absolute last resort. Therefore, you should stay calm and consider the options that are given to you.
Once the hearing is completed, the judge will decide on one of four possible conclusions: Strike It Out, Adjourn, a Suspended Repossession Order or a Possession Order.
If the judge determines that your house should be repossessed, or if you fail to adhere to the terms set forth under any of the other possible rulings, your house will officially belong to the lender. If you haven’t left by the time established by the court, the lender can file to have a bailiffs warrant issued and you will be removed from the property. Needless to say, this can be a stressful and emotionally draining time. However, even with the bailiffs warrant issued, it is not an immediate process.
If such legal actions have been taken by the lender to evict you, you will still be given at least 14 days notice before the actual eviction date. Additionally, the bailiffs have to give you advance notice of when they are coming, including the date and time. They will either mail you a form N54, Notice of Eviction, or will physically bring it to your home. The N54 is typically received two or three days prior to the eviction date.
When the bailiffs arrive, and if you are still there, they will ask you to leave. It is possible that they will give you a short amount of time to gather additional items to take with you, however, there are no laws requiring them to do so. Once you are out, the locks are usually changed and the power and gas supply to the house is shut off. A representative of the lender will also be there and will receive the keys for the new locks from the bailiffs. Police officials may also be present to help avoid any potential disturbances.
After the house has been officially repossessed, the lender will sell the property for some, if not all, of the money they lost due to the foreclosure. Depending on how the courts ruled, you may still be liable to pay the lender. If the lender is not able to sell the property for the total amount of what you owed, including legal fees, the amount of the mortgage and arrears, you may have to pay the remainder. However, if the lender is able to sell the property for the full amount, you will become free of any debt.
If you are faced with this ordeal, do not simply sit back and hope for the best. There are actions that you can take to help make the process less stressful, or even prevent it from occurring altogether:
One of the best things to do to avoid repossession is to get a repossession loan. A repossession loan is expensive and can range between 1% and 5% per month, but in some cases, it is the best way out. If you are expecting money from somewhere but are short of time, go for a repossession loan. Also, if you have money stuck in an asset that you’re waiting to liquidate, a loan can buy you time. This way, you can pay off your lender, partly or completely, stopping your repossession immediately. Once that is done, you can pay off the repossession loan lending company (an expert like TIC Finance) in a few months when you have the money.
Regardless of your plan of action, the important thing to remember is that you can’t just hope for the best, you need to get up and act. There are steps you can take to help make the house repossession process a little less stressful and there are organisations out there that can help you.