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What to do if you’re faced with eviction for mortgage arrears

Posted 10 November 2014

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<p>If you don’t pay your mortgage, or do not respond to your lenders requests for payments this may eventually lead to you losing your house and being evicted, so make sure you’re aware of your rights.</p>

Being unable to keep up with mortgage payments is hard, and it can be even tougher if you’re worried that your financial difficulties will lead to you being evicted. It may seem impossible, but try not to panic. Here’s what you should know if you’re being threatened with eviction for not paying your mortgage, and what you can do if the worst should happen.

Missed payments

Frequently missing or being late with your mortgage payments means that your lender will probably start contacting you asking for the money you owe them. Ideally you should have been in touch with them before this to let them know you’re having trouble meeting the payments, but make sure you get in touch if they’ve started to chase you for payments. If you don’t want to speak directly to your lender, you could ask for help from an independent source of expert debt advice and support.

If you bury your head in the sand, continue to miss payments and ignore letters and phone calls from your lender, they may have to seek to repossess your house to cover the debt which would lead to eviction. However, this will be a last resort. Most lenders don’t want to go through the complicated and costly process of evicting borrowers, and would rather work out a payment schedule with you. Options may include extending your mortgage term so that you pay less each month for a longer period, for example.

However, if you don’t want to negotiate with your lenders … or have someone negotiate with them on your behalf … or you can’t afford to cover the cost of your mortgage arrears even through reduced payments, you may want to consider selling your property, especially if it is worth more than the outstanding mortgage debt. You can either sell it yourself or give your keys back to the lender and ask them to sell it for you. This is known as voluntary surrender. In either case you’ll need to have found somewhere else to live first.

Be aware that if you or your lenders sells your house for less than the outstanding mortgage debt, you will still be liable for the difference. You should also think very carefully before using one of the firms that offer to buy your house quickly. Do not rush decisions or commit too early, make sure you quiz the provider. There have been a number of reports of bad practice in this area.

This is a major step, so don’t feel pressured into making a quick decision … the best thing to do is to talk your problems through with your lender and see if you can come up with a solution.

Court action

If as a final resort your lender has to repossess your house and evict you, you’ll be summoned to a repossession hearing at court. This will give you the chance to explain to a judge why you’ve not been able to keep up with the mortgage payments. This can seem intimidating, but try to attend the hearing if possible. If you don’t attend, the judge will only hear the lender’s side of the story, and may be more inclined to rule on their side and repossess your home.

There’s a chance the judge may decide that you won’t be able to make your arrears payments, and they can then order that your home is repossessed. They will give you an eviction date when you’ll have to be moved out by and if you ignore this, bailiffs … who are appointed by the court … may be allowed to remove you from the property.

After your home has been repossessed, it will be sold to cover the cost of your mortgage. If the house or flat is worth more than you owed to the lender, you will be paid the difference. However, if the property is actually sold for less than your debt, you will have to pay the shortfall.

Get in touch with your local authority as soon as possible if you think you might be evicted and don’t know where you’ll be able to live. They may be able to help you find a place or rehouse you. If you have children, your local authority legally has to find you alternative accommodation.

Asking for help

At any stage, even after you have been served with an eviction date, you can ask for help, so it’s better to seek advice sooner rather than later. You could contact one of our expert advisors or another source of independent help, which might be what you need to start taking control of your problem debt.

We could offer you advice on debt solutions … for which some fees may be payable … or just some general advice and support. You may be able to avoid eviction, or at least figure out what the next step is, but the best thing to do is take action, before you let things get too far.

by Shelley Bowers

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