Repossession and how to avoid it Court proceedings
If you have to go to court make sure you're aware of your options
If you are unable to find a solution with your mortgage lender and government schemes can’t help, your lender can start proceedings by issuing a claim for possession of the property. In England, this is issued by the county court and gives details of the case against you. It gives a date for the court hearing.
Repossession cases in Scotland are heard by the sheriff court and follow a different, but similar, procedure to that described below. For more, visit the website for Shelter Scotland.
Court proceedings for repossession
You will be sent a notice of possession proceedings at least 14 days before the hearing.
At a court hearing, which you are required to attend, a district judge considers your lender's claim and any offer you have made to deal with the mortgage arrears.
You can get assistance in presenting your case from an adviser from an organisation such as Citizens Advice, and may choose to be represented by an adviser or a solicitor during the hearing.
Suspended possession
The judge may decide to dismiss the case, adjourn it or make a suspended possession order that allows you to stay in the property as long as you keep to an arrangement to pay off the arrears.
Alternatively, if a loan is covered by the Consumer Credit Act the judge might issue a time order, reducing your monthly repayments by changing the interest rate charged or increasing the term of the loan.
Outright possession
If you are unsuccessful, the court will make an outright possession order requiring you to leave the property. This may or may not include a money judgment, obliging you to pay back any money owed.
Eviction resulting from repossession
Following judgment, the mortgage lender might apply for a warrant for bailiffs to evict you. It can do this following an outright possession order or if you win a suspended possession order but fail to keep to the terms of the agreement.
If the lender obtains a warrant, bailiffs can then give you notice of the date and time of the eviction. If you need more time to arrange alternative accommodation you can apply for a stay of execution. This will not always be granted.
Forced sale
Once the lender has repossessed the property, it can sell it and use the proceeds to pay off your outstanding debt. The lender has a duty of care to get the best price it can but often such sales are at auction and fetch less then they would on the open market.
If you feel that your lender has treated you unfairly – by delaying the sale and continuing to charge you for the mortgage, for example – you can complain to the Financial Ombudsman Service (FOS).
Shortfall
If the sum raised by selling off the property after repossession fails to cover the mortgage, you are responsible for the shortfall. Your lender may not reclaim this immediately but can pursue you for this for up to 12 years.