Page last updated at 10:30 GMT, Friday, 20 February 2009

'Don't ignore the threat of repossession'

Money Talk
Lisa Wragg
Manager at Shelter's helpline

Door key
Missing repayments can eventually lead to losing your home

This year, it is estimated 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 England offers all homeowners who are in arrears and at risk of losing their home.

Firstly, do not ignore the problem. When you fall into arrears, your lender should contact you, asking you to put the problem right.

If they are not happy with your response, they should write to you, warning of court action.

Checklist

Do not ignore your lender's warnings.

Ask yourself:

  • Can I cut back on spending without hardship?
  • Can I rent out a room or increase my income in any other way?
  • Am I behind on other loans secured against my home?

If you feel that you can't make savings, don't give up. Visit your local advice agency - Shelter, Citizens Advice Bureau (CAB) or Consumer Credit Counselling Service.

Trained experts will advise on next steps and how best to negotiate with your lender. These organisations also have good advice on their websites.

Then talk to your lender. While some lenders will still push for possession, most only take action if there is no alternative.

The chances of you keeping your home increased on 22 October when Prime Minister Gordon Brown strengthened what is called the pre-action protocol stating lenders must explore every avenue to keep people in their homes.

If lenders cannot prove this, judges now have the powers to throw out the case.

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 will be far more helpful if they know you're really trying to pay your mortgage. This could stave off repossession.

Court cases

If you ignore your lender, or cannot make payments they have asked for, the lender can apply to your local county court for a possession order.

Above all, do not ignore the problem and hope it goes away

In most cases, the lender will write to you before they apply for a possession order but there is no strict legal obligation for them to do so.

It is possible that the first contact you receive from your lender will be a court summons, giving you a hearing date, which must be at least 28 days after the summons date.

If at any time the lender tells you, either verbally or in writing, that you do not need to appear at court, ignore this advice. Always attend court hearings to ensure you are there to fight your corner.

At the hearing, the judge will hear evidence from you and your lender. It is vital that you:

  • Attend the hearing. The court, not the lender, makes the decision on repossessing your home. If you can make an offer of repayment that is sustainable the judge may well decide in your favour
  • Tell the court why you are in the financial situation you are. For example, if you have been off work because of ill health but are due to return and see your monthly income increase dramatically, the judge may well decide in your favour
  • Speak to a representative at a county court desk from Shelter, the CAB or the government who can represent you in your hearing.
  • Take a prepared financial statement about your income and outgoings. You can present this to the judge and it will be very helpful for people working at the court desk.

Above all, do not ignore the problem and hope it goes away. The longer you leave it the more difficult it will be to negotiate with your lender.

And ignoring the issue until you receive a court summons also makes it more difficult for organisations like Shelter to give real practical help that could save your property from being repossessed.

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.

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