By Jennifer Laughland
Principal solicitor, Shelter Scotland
Ignoring repayment problems can make the situation worse
This year, it is predicted that up to 75,000 homes will be repossessed in the UK.
Every repossession case is different, but there are some key pieces of advice that Shelter Scotland offers all homeowners who are in arrears and at risk of losing their home.
Firstly, do not ignore the problem.
As soon as you struggle to pay any loan secured against your home, ask yourself:
- Can I cut back on spending without hardship?
- Can I rent out a room or increase my income in any other way?
If you feel that you can't make savings, don't give up. Contact a local advice agency, such as Shelter, or a solicitor.
Trained experts can give you advice on what steps you can take and advise you on how best to negotiate with your lender.
Then talk to your lender. All lenders should only use repossession as a last resort.
When talking to your lender, be honest about your finances, the amount you can afford to pay and, importantly don't try to overstretch yourself.
The lender is likely to be far more helpful if they know you're really trying to pay your mortgage. This could stave off repossession.
If you do not discuss the situation with your lender, cannot make the payments they have asked for, or sometimes just to secure repayments, the lender may take court action. An Initial Writ, the document that starts the court action, will be served on you.
You only have 21 days to respond to the Initial Writ, so you must seek legal advice immediately.
If you do not think you can afford legal advice, you may be eligible for help with legal costs. Get advice from Shelter, the Scottish Legal Aid Board or a law centre if there is one in your area.
If you cannot see a solicitor within 21 days, but are able to see one a few days after, you should lodge in court the form called the Notice of Intention to Defend, attached to the Initial Writ, stating that you intend to defend the action, together with the required court fee (currently £75). This will give your solicitor more time to respond to the Initial Writ.
When you meet with your solicitor they will probably draft a Mortgage Rights Act minute.
The minute is your opportunity to give your reasons why the court order should be suspended.
It will include reasons why you fell into difficulty and what you intend to do, like paying your arrears in instalments, applying to the Scottish Government's Mortgage to Rent scheme or even selling your property.
Sometimes, lenders agree to the plan that you have laid out and you can settle your case out of court. Otherwise, there will be a full hearing of the case.
At the hearing, the Sheriff will hear evidence from you, and any witnesses you have, and your lender.
Remember, the court, not the lender, makes the decision on repossessing your home.
If you can make an offer of repayment that is sustainable or have another reasonable proposal for how the arrears can be paid, the Sheriff may well decide in your favour.
We strongly advise that you arrange legal representation, but if you can't you should try yourself to take the steps already described.
If you do not take action in time when you receive the Initial Writ, there will be no hearing in open court, the lender can ask the court for decree in absence and you will then receive a notice advising you that you are going to be evicted.
Even if you receive this notice you should still seek legal advice. You may, in certain circumstances, be able to apply to the court for another chance to have your case heard.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.