How Do I Stop a Repossession Order?
Being issued a repossession order can be a terrifying experience filled with uncertainty. But don’t panic, there are a variety of things you can do to stop your house repossession. It’s important to make a plan and communicate with your lender, as well as advisers and other professionals rather than burying your head in the sand and waiting for it to happen.
- What you need to do when you’re issued with a possession order
- House repossession process: a step-by-step explanation
- Repossession laws
- Ways to stop a repossession order
- What happens when the lender repossesses your house
- Understanding repossession
1. What you need to do when you’re issued with a possession order
Contact your lender to buy more time
After you receive the first notification from your creditor asking you to sort out your arrears, it’s in your best interest to start a dialogue with them.
Take some time to look at all your options. Very few situations are actually hopeless, so don’t assume the worst.
Get some legal advice and make your own proposal about how to handle the debt. This step will buy you much-needed time to make backup plans and consider selling your property if need be.
The creditor must answer your new payment proposal. In the best-case scenario, they may even accept a new payment schedule or lower your interest rates.
In the worst-case scenario, they’ll warn you that they’re ready to start the repossession proceedings.
Even when they give you this warning, you can still negotiate with them to buy more time. The law requires them to respond positively to your negotiation attempts, so you have nothing to lose by trying.
At the very least, you’ll gain more time to deal with your financial problems, which could make a huge difference in your future.
Contact an adviser
While you often get the best legal support from a paid solicitor, you may not be in a position to get such help. In that case, you can still get sound legal advice on repossession issues for free from these government agencies and non-profit organisations:
- Civil Legal Advice can counsel those who qualify for free legal aid who live in England or Wales. Call them at 0345-3454-345.
- The housing charity “Shelter” has a free national helpline you can call at 0808-800-4444.
- The UK’s Department for Communities and Local Government has made sure that everyone can access free legal representation for their repossession hearing in most major county courts. For more than half of hearings where free representation is present for the homeowner, they avoid immediate repossession. Contact your local county court to enquire about this option.
Contact a finance company to get repossession loans
An effective way to halt repossession proceedings is to settle your mortgage arrears with a bridging loan, or repossession loan.
Next, your debt will transfer from your current lending company to the new one, and your former lending agency will drop all repossession proceedings. This way out only works for some people who may have a history of good credit and a reliable plan to settle their debt in the near future.
2. House repossession process: a step-by-step explanation
- After you miss your first monthly mortgage payment, the bank or lending agency will contact you. They might increase your interest rate or impose some other penalty for your payment delay.
- After you miss two monthly payments, the financing agency will start sending you more letters and warnings about the possible consequences of your delayed payments. If you don’t contact them, they are more likely to initiate the filing for repossession of your home sooner. If you do contact them and try to start negotiations, then you can often buy yourself another month or so to try and clear your arrears.
- The law requires the agency to notify you when they are starting repossession proceedings. At this point, your lender applies to the local court and explains why they want the judge to grant them a repossession of your property.
- Your local courthouse will set a date for your hearing. On this day, the judge will decide if you can stay in your home or not. The court will mail you a copy of your lender’s claims against you. They will include the time and day of your hearing and give you a defence form.
- At this point, you must complete the defence form and send your reply to the court. You’ll need to get legal advice to prepare for the court hearing and gather your evidence. If you want to settle the case out of court, you may be able to make a negotiation with your lender’s solicitor in some circumstances.
3. Repossession laws
When you attend your court hearing, the judge will listen to all the evidence and resolve your case in one of four ways. It’s a good idea to show all the paperwork and emails you receive from your creditor to a legal adviser or a charitable legal agency before your hearing.
Possible results of a hearing
- The judge may rule in favour of your lender and give permission for repossession. Then your lender could evict you if you don’t leave the property by the date that the judge decides. In most cases, you have to leave within 28 to 56 days. They will sell your home to settle your mortgage debts.
- Alternatively, the judge may give a suspended possession order so that you can remain at home as long as you adhere to the judge’s conditions. Sometimes the judge may let you stay in the home long enough to sell your property, or you can keep your home if you make additional payments. Keep in mind that if you break any of these conditions, then your lender can evict you.
- If the case is complex, the judge may adjourn your case. That gives both you and your lending agency more time to work out certain steps before the judge reviews your case again.
- If the lender is acting against the law, you could get lucky and receive a dismissal of your case.
During repossession cases, don’t lose your head in fear too quickly. The below list is a set of required steps your lender must follow in order. If they don’t, you can file for more time to process the case.
Required steps your lender must take
- The lending agency must tell you exactly how much you owe and how many additional charges or interest they’ll add to your arrears.
- They must discuss with you or someone who can legally act on your behalf the exact reasons for all these charges. They must also enquire about your current financial situation and talk about different options you have for repaying what you owe.
- Legally, the bank or lender must at least consider any reasonable requests you make to move your payment date.
- Once you break your payment agreement, they must give you a final-warning repossession notice before they start the proceedings.
- If the lender wins the case and gets a repossession order from the judge, then they can evict you if you don’t leave the property by the designated date. To do so, however, they need to apply to the local court again to get a bailiff’s warrant. They can’t just send anyone to your house to remove you without a warrant.
- If they get a warrant, bailiffs will write to alert you ahead of time about when they’re coming to repossess your home. Bailiffs must behave professionally and cannot resort to any physical violence when they arrive. If you still don’t leave when the bailiffs come, they can call the police to remove you.
- Your lending agency must try to get the highest price possible when they sell a repossessed home. If they sell a property at a shady auction or by some other practice that unnecessarily lowers the selling price of the property, then you can take action. Contact the Financial Services Ombudsman when the lender is unjustly behaving in a way that forces you deeper into debt.
4. Ways to stop a repossession order
Take further action
Even if the judge rules to repossess your home, you can ask a legal adviser if you have the options to file for a new order to stay in your home.
Some cases allow you to suspend a possession order or appeal the decisions to a higher court.
Also, it’s never too late to make new financial agreements with your lending company. From the day the court issues a repossession order up until the day of eviction, you can still continue to make negotiations with your creditor about easier ways to settle your arrears.
Voluntary house repossession
Voluntary house repossession involves moving out of your house and handing back the keys to your lender before you’re officially asked to leave. This may seem like the best idea for someone feeling overwhelmed by debt but this is highly discouraged against.
In a voluntary repossession, the bank needs to sell your property to recover the cost of the loan. You’ll still be expected to pay all estate agency and management fees, and may continue building up mortgage debt if the property doesn’t sell right away.
Putting the sale into the hands of your lender also might result in a lower price being found, putting you at further risk of a shortfall.
What to do instead of voluntary repossession
If you owe less than £20,000, it could be a good idea to ask for free legal advice about filing for a debt-relief order. You may qualify for it if the agencies decide that you have no legitimate way to pay your debts, no assets, a very low income and no other prospects to improve your financial situation. You would lose your home, but you’ll get a chance to start over financially.
Declaring bankruptcy is generally a bad idea for most people, so always seek legal advice first. In bankruptcy, your accounts become frozen. You’ll lose any valuable or nonessential assets you have, including your home.
Plus, it’s harder to get a job in some fields or good credit in the future with a history of bankruptcy.
The only advantage is that bankruptcy allows you to clear your debts, but your life becomes very restricted. Besides that, just filing for bankruptcy alone costs hundreds of pounds. Few people are exempt from the bankruptcy filing fee.
Find out more on the UK government’s website about current bankruptcy laws and homeowner rights. The laws vary depending on if you live in England, Scotland, Wales or Northern Ireland.
5. What happens when the lender repossesses your house
As mentioned earlier, you have three choices when the repossession order is confirmed.
- First, you could fight the repossession order in court to buy yourself more time or keep your house.
- Secondly, you can continue to re-negotiate new mortgage-payment terms on your own with your lender, and if they agree to new terms, they’ll drop the warrant of repossession so that you can stay in your home.
- If all else fails, you must move out by the date specified by the judge on the repossession order. If you don’t move out, the lender will file for an eviction warrant to remove you.
After you leave and the lender sells your home, you must pay back any balance of arrears you owe to the lender.
If my house is repossessed, do I get any money back?
Your mortgage company has the legal duty to sell it at the best possible price. As soon as they repossess it, your house will be put up for sale in the market.
The lender will use the sale proceeds to repay the debt, only if the money is enough. If property is sold at a price lower than the mortgage debt, then you have a shortfall debt that you must pay the mortgage lender.
On the other hand, if the sale results in a surplus, then it’s returned to you. Typically, that’s the only money you should expect back.
You pay for all legal costs and estate agent costs. You are also liable to continue paying the mortgage until the sale goes through which might take many months. All these expenses are taken from the surplus amount the mortgage company owes you after their money is paid.
It is therefore recommended that you sell your property yourself.
What is repossession shortfall debt?
If your property is sold at a price that is not enough to cover the mortgage debt, the lender will still claim the remaining debt. This debt is commonly referred to as “shortfall debt”. The lender will notify you immediately if your property sells at a price that is below your mortgage.
To receive these statements at your current place of residence, the lender may require you to provide your home address.
Can I get a mortgage after repossession?
Yes, but it’s highly advisable to apply with a mortgage specialist and to wait as long as possible before applying.
If you apply for another mortgage within a year of your repossession, you’ll almost certainly face rejection.
However, applying from three to six years or more after the repossession greatly increases your chances of getting a good mortgage contract with a decent rate.
Also, the banking group of the lender who repossessed your home is likely to never grant you a mortgage again. That’s why you need to do some research and apply to lenders from new banking groups, preferably with a mortgage adviser for a better chance of success.
6. Understanding repossession
The thought of being repossessed can be a very difficult concept to grasp. We at TIC Finance sympathise with homeowners who face these issues. We have been in this industry for over a decade and helped untold amounts of clients get back on their feet by giving them time to sort out their finances in the right way with a positive financial solution.
Being FCA regulated, we have a duty to our clients to provide a sound individual financial package which suits our clients’ lifestyle and living.
If you have not already done so, we advise having a look at the following government website for further information. www.citizensadvice.org.uk/debt-and-money
Get in Touch with TIC Finance
No case is too difficult for us or beyond our reach. All you need to do is to get in touch and we can provide you with free initial expert advice.