Stop Repossession Case Study - Understanding Repossession Order

If you are in arrears and made an offer to your lender on how to clear them then your lender may or may not agree to that. This is because you are almost likely to be under contract to pay interest payment on existing mortgage to your lender every month. And your lender does not have to agree to any rearrangement.

Some times lenders take tough stance if a similar past promise has not been kept. In that case lender will commence legal proceedings. You will be sent a repossession order with a hearing date at your local County Court.

This may sound very daunting. Obviously this is not a pleasant experience for most home owners. This is a formal meeting in the court chambers between you, lender's representative (usually a solicitor) and a Judge. There is a good chance that the judge will suspend the repossession order so as to give you more time to resolve the issue, so as to save time and distress to all parties.

When you get to the Court, make sure to let the Court Usher know of your presence. Some time the lender's solicitor may approach you to try and resolve the matter before you even go into the hearing. This is because they know the procedure inside out and know what to expect in the chambers as they are highly speclialised in this type of hearing.

You will be given the opportunity to explain why you fell into arrears and what intentions you have to repay them.

Following are the usual ways of clearing the mortgage arrears and in your explanation you may want to include some or all of them:

1. You have additional income and can now make an additional extra payment
2. You have taken out a homeowner loan which will consolidate the arrears
3. You are remortgaging which will redeem your current mortgage in full
4. Your home is on the market and will be sold in the near future
5. You have an investment that you can draw on shortly to draw the arrears

If you are to include some or all of the above, it is important to substantiate your claim. For example,

• If you have fallen into arrears as a result of sickness or unemployment and are now back at work, demonstrate that the additional payment is affordable. You may prepare an income and expenditure statement before hand to show to the judge which may demonstrate the amount of disposable income available to you which you can pay to clear your arrears.

If you are taking out a homeowner loan to clear the mortgage (in 2 above) arrears then

• It is important that you can demonstrate that you are not increasing your debt liability and monthly commitments. It is usually a good idea to take out a homeowner loan when you can consolidate other debts such as expensive unsecured loans and credit cards so you can demonstrate to the Judge you are reducing your monthly financial commitments.

• It is important that you demonstrate that the new mortgage is more affordable. In general if you can find a mortgage taking into account that you are in arrears with your current mortgage, you will be paying a premium for this mortgage. A new mortgage is usually only of a financial benefit to you if you are consolidating other more expensive commitments such as secured loans and other unsecured debt.

If your home is on the market (as in 4 above), then

• Make sure you take along the property particulars. Take the sales brouchure or your estate agent's marketing material, evidence of expected house price as well as the outsnatnding mortgage to demonstrate equity in the property and so on. The Judge will expect you to make your mortgage payments until your home is sold.

Lastly, if you have an investment that is shortly going to mature it goes without saying that you are best to take along proof of this too.

Judges are more likely to sympathise with you if you demonstrate that you are doing the best you can to clear your arrears, and back your claim with evidence.

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