How to Avoid Repossession & Put Cash in Your Pockets

If you are behind on rent or mortgage payments and have not come to an agreement to repay the arrears, the landlord or mortgage company can start possession action in the county court to take back the property.

The landlord/lender will first issue a claim form which will include a date and time for you to attend a hearing at your local county court. The claim form will be accompanied by particulars of claim which contains a long list of information, including:

•  A description of the property to be recovered, if it is a mortgage.

•  Details of whether it is regulated under the Consumer CreditAct 1974

•  An outline of the state of the account

•  An outline of any previous attempts to repossess the property

•  The details of what the landlord/lender is seeking e.g. possession of  the property and payment of all monies outstanding under the mortgage  

 

Lenders have repossessed around 640,000 homes since 1986, affecting over one million people – around 2% of the population. There are many underlying reasons for the high repossession rate including job loss, divorce and medical bills just to name a few. Many of these things are beyond the homeowner’s control.

We understand that bad things can happen to good people. It’s probably just a temporary setback and all that is needed is a second chance. A little education can go a long way. We work each and every day to prevent properties from going back to the bank, and people's credit record from being devastated.

The purpose of this Special Report is to help you understand how the repossession process works, and why it’s best to avoid repossession if at all possible. Please use the information in this report to understand the process and take action before it’s too late.

Does Bankruptcy Stop the Repossession Process?

Yes, filing bankruptcy will stop the repossession process, but only temporarily. Bankruptcy is not a cure for the problem. By filing bankruptcy, the borrower can get even further behind in their payments. During the bankruptcy process repossession proceedings are halted, and the bank can no longer “hound” the borrower about past due mortgage payments.

Once the bankruptcy is finalized and the debts discharged, then all of the past due mortgage payments, plus the payments that accrued during the bankruptcy proceedings are due. If the payments, penalties, interest and solicitors fees are not paid, then the house will be foreclosed on – repossessed.

A bankruptcy can blemish a person’s credit report for up to 6years, but they may be able to qualify for another mortgage (at a high interest rate) in a year or two. A repossession can delay qualifying for a mortgage for a much longer period of time. 

For a conventional loan, the wait is probably 4 years after the date of the repossession sale. There are some loan programs available in a shorter period of time, but typically a 20% down payment is required, and interest rates will be 2-4% higher than the going rate.

 

“Repossession Has a Long-Lasting Effect”

For any homeowner facing the threat of repossession, he or she should carefully consider all options before allowing the home to go back to the mortgage company.  Repossession has long lasting effects that can haunt a person for years down the road. 

Besides the obvious fact that a homeowner will lose his or her house, there are other ramifications that will affect someone facing foreclosure including emotional and financial burdens.

Some of the most common effects of repossession are:

1) Loss of residence – Often overlooked is the stress and expense of having to move and find a new place to live.  

2) Loss of equity and appreciation in the home - Home values usually increase each year. The longer a person lives in a home, the more the home's value increases.  In addition, the more payments a person makes on a mortgage, the more he or she decreases the balance owed against the home.  In many cases the combination of the equity and appreciation can translate into the homeowner losing thousands of pounds.

3) Inability to borrow money in the future - The most serious consequence facing a homeowner is the immediate destruction of his or her credit profile. A repossession is a serious blemish that will label a person as unworthy for credit.  This derogatory entry remains on the credit report for at least 6 years.  The result may be declined applications for credit, the inability to rent an apartment, not qualifying for employment, and a host of other implications for the person.

A County Court Judgment (CCJ) will be registered against you and will remain on the Register of County Court Judgments for 6 years .The lender will also register the repossession on the Council of Mortgage Lenders register which will make obtaining a future mortgage very difficult.

4) Lawsuits – Lenders and other lien holders, may still be able to file a lawsuit for damages in some situations.  

5) Potential loss of employment - Some employers may require their employees to maintain good credit histories.  Notification of a repossession may be grounds for an employer to fire the person from his or her job. Many employers check each applicant’s credit report, and part of the hiring decision could be based on credit worthiness.

6) Loss of self-esteem - Emotionally the stress of repossession may have serious psychological effects on a person.  The loss of his or her home may lead to depression, loss of self-esteem and embarrassment around family, friends, and others.

You want to avoid repossession at all costs.

 

What Exactly is Repossession?

Repossession is the legal proceeding in which the bank takes over ownership of a property, because the homeowner has defaulted or missed several mortgage payments.

Under the terms of your mortgage contract, your lender will have the right to issue proceedings if you do not make your required payments. Normally 2 months arrears is sufficient to enable a lender to take action. In reality, lenders try and avoid taking proceedings and will generally be willing to come to an arrangement to clear the arrears.

If the lender has concerns about the level of the arrears, or is not satisfied with your proposals to repay the arrears, they will take possession action in your local County Court. They do this so that they can take control of your property, sell it, and recover the mortgage balance outstanding.

The Stages Involved:

• In House - Initially the lender will manage the account within their Arrears Collection Department. They will write letters and perhaps telephone to chase missed payments. It is important to keep your lender informed of your current position and to try to come to an agreement to clear the arrears off over a period of time.

• Solicitors - If the arrears go beyond a certain level (generally 4-6 months +), lenders will refer the account to their Solicitors - the first step will be for the solicitors to write to you demanding full payment and warning that repossession proceedings will result if the account is not brought up to date. Again, make contact with the Solicitors and try to come to an arrangement to make ongoing payments, and to clear the arrears over time.

• Possession Proceedings - Often at 6+ months arrears, the solicitors will issue County Court Repossession proceedings. The court will set a hearing date. You should attend.

• Court Order - At a possession hearing the court can make a number of orders:

1. Adjourn the hearing to a new date (if for some reason the hearing cannot proceed due to absence, or the need for further information or clarification)

2. Dismiss the application or Adjourn it generally (indefinitely) - usually only following full payment of the arrears

3. Make an Order for Possession (usually giving the lender the right to possession after a fixed period; typically 28 days) - Note - Even if a Possession Order has been made, Ezee Property Solutions Ltd. may be able to offer a solution. It's never too late!

4. Make an Order for Possession, suspended upon payment of the current monthly instalment, and an agreed amount towards the arrears. This order is very readily applied by the courts. It gives you a further chance, and also gives the lender security. If payment is defaulted upon, the lender has an immediate right to seek possession by Possession Warrant (see below)

5. Possession Warrant - If an Order for Possession (see above) is made, and you remain after the date the court has ordered you to leave, or if a Suspended Possession Order has been made, and you have defaulted upon payment, the lender will apply to the court for formal eviction. You will receive a date and time from the court when you must leave. The court bailiff will arrive with a representative of the lender and a locksmith to take formal possession of the property. Even up to the day before eviction, Ezee Property Solutions Ltd may be able to offer a solution. It's never too late!

Again, homeowners should do everything they can to avoid repossession, which is one of the most damaging events that can occur in an individual's credit history.

How Can We Help?

We have a variety of creative programs available to help in almost any repossession situation. We will be happy to meet with you to discuss your situation and suggest solutions. Remember, our consultation is free and there is never any pressure or obligation.

Don’t delay, give us a call today on  Tel. 0800 043 3513 or complete the online Property Consultation Form.

Thank you and we look forward to working with you.

 

Enquiries to:

Timmy Olagundoye BA (Hons)                                                            Managing Director                                                                                 Ezee Property Solutions Ltd.                                                               Suite 501 International House,                                                              223 Regent Street,                                                                          London W1B 2QD.   

Tel. 0800 043 3513

Email: Timmy@EzeePropertySolutions.com                                      Web: www.EzeePropertySolutions.com