This Includes Your Mortgage And Any Equity Loans You Ve Taken Out

Category: Finance, Credit.

For homeowners struggling with debt problems, losing your home is the ultimate nightmare. Your property can be sold at much less than the market value, which might not even be enough to clear your debt, leaving you homeless but still indebted.

Not only will you suffer the emotional upheaval and traumatic change of lifestyle involved, you may even find that it isn t the end of your financial problems. Fortunately, this nightmare scenario is not as common as you may think. Any debts you have on credit cards, bank accounts and the like are classed as unsecured, which means that even though your possessions could be seized to pay off what you owe, your home is not directly at risk unless your debts are serious enough to warrant bankruptcy. Repossession is a last resort for your creditors, and is only an option for a select few of them. Although government related debts such as tax arrears can also be cleared through forcing the sale of your home, this is not a particularly common occurrence, and the main risks to your home are loans which are secured on it. Mortgage lenders will not exercise their repossession right lightly, as it s an expensive option for them, they ll be missing out on your future interest payments, and it doesn t do a great deal for their public image to be seen turfing families out on to the street.

This includes your mortgage and any equity loans you ve taken out. However, the prospect of repossession proceedings is still a serious business and you should urgently seek advice from either the lenders themselves or a qualified and licensed debt advisory service. Repossession must follow a legally specified course, starting with a simple letter from the lender to you notifying you that you are in arrears, and asking that you make arrangements to resolve the matter. The repossession process is not a quick one, and you ll generally have around six months between falling into arrears and being served an eviction notice, which is ample time to rearrange your finances with a consolidation loan or remortgage, or even to negotiate new terms or a repayment program with your mortgage lender. If no resolution is reached, a second letter will be sent warning of legal action. There needs to be no further notice for court proceedings to start if you don t respond to this final letter. If you re still in arrears at this stage, and haven t made a genuine attempt to negotiate with the lender, a solicitors letter will be sent giving you 7 days to clear the arrears or make an acceptable proposal on how you plan to do it.

If it does get to court, then a judge can grant a possession order which gives your mortgage lender the legal right to evict you. Even if an order is granted, this doesn t necessarily lead to eviction, as mortgage companies can keep the order in reserve as an inducement for you to clear your arrears. In practice, judges will try to broker an agreement on an acceptable and fair way forward, especially if children are involved. So, if you re worried that you might be facing eviction, remember that it is in fact a fairly rare thing for a mortgage lender to enforce, and that there is plenty of opportunities to stop the process once it s started. The best advice is to keep calm, and seek advice, contact the lender on how you can come to arrangement that keeps your creditor happy, but more importantly keeps you in your home.

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