Your account with your lender is "in arrears" when you have missed some mortgage payments for whatever reason. Once you are in arrears, having missed payments for a couple of months or more, your lender is likely to seek court action in order to take steps to regain ownership or "repossess" your property. If you fail to contact your lender and try to reach agreement, the lenders only option to get their money back is to take control of your property and sell it. They must do this through the courts.



Although repossession should be taken seriously, the fact that a lender is taking court action doesn't mean that its time to throw in the towel. You do have some options but the main thing is to take some action and act quickly. Options to consider include refinancing your property, selling your home or borrowing the money from friends or family to clear the arrears.

Before you decide any drastic measures, the most important thing to do is to talk with your lender. Some lenders are more helpful than others, but help may include extending the term of the mortgage, switching to interest only from a repayment mortgage, or rescheduling the debt in another way. This may prevent the need to go to court. However, even if you can't agree a suitable solution with the lender, the judge at court is more likely to sympathise if you can show you have tried to solve the situation and not hide from it.

Assuming you do have to go to court, then its worth noting that although serious, its far less formal than you may think. Possession hearings are held in the county court and are in private rooms. The lender is likely to be represented by a legal clerk. You, the lender and the judge will all be seated at a table and generally hearings only last ten minutes. Its your opportunity to explain what's happened and aim to reach agreement on clearing the debt so you can keep your home.

Generally speaking, a judge will grant you a suspended order if you can meet future monthly payments plus a small contribution towards the arrears, or you could offer to clear the arrears if you can gather the funds together to do that. A suspended order means you can keep your home provided you meet the agreed commitment. Paying off the arrears means your account is back up to date so the lender cannot repossess it. Other options such as refinancing or selling your home are only likely to gain extra time to get them through if the judge is satisfied that one of these options is sufficiently progressed and will be finalised within say four weeks.

Refinancing your home may be an option worth considering. However, in a repossession situation time is of the essence and the broker may not have any control over timescales or being able to guarantee you will be able to get the refinance you need. The fact that you are in arrears will also limit the availability of finance to you and the long term cost is likely to be very high. Selling your home is a further option but again beware that you will have very little control over the timescales and it may take time for an offer to be made and for the buyer to get the finance they need to buy your property.

A suspended possession order may be granted at the court hearing by the judge. This will allow you to stay in your home provided you adhere to any terms that the judge has stipulated. For example, this may be to make full monthly payments in future together with a small contribution towards arrears. The judge may also suspended the order to allow you to follow through with any other proposal you have e.g. refinancing your home or selling it. If you fail to convince the judge to suspend or waive the order then the lender will be granted possession and you'll have a matter of a few weeks before eviction.

Facing repossession is every homeowners worst nightmare. However, recognising that their are options available and that there are organisations available to help you is important. What's critical is taking some action and seeking help. Organisations such as Shelter, the Citizens Advice Bureau and the National Debtline are good starting points for advice, Make sure you are contacting these government supported agencies or charities and not some copy cat private enterprise.