Avoiding Repossession in Hard Financial Times

With the number of home repossessions rising as the tough economic conditions take a toll on family finances, it is essential that borrowers do all that they can to stave off legal action and get debt problems under control. Taking action early, such as organising a debt consolidation loan, means that this final sanction could be avoided. Waiting too long and leaving debt problems to fester will only lead to one sad conclusion.

Lenders, whether in England and Wales or in Scotland (where the rules are different) have to take broadly the same steps before they can effectively repossess a property. That means that anyone with debt problems will receive written notice from their lender of the impending action with the final resort being actual physical repossession. Therefore, any borrower should act immediately upon receipt of any letter from their lender to address debt problems and rearrange finances to ensure that the mortgage payment is met.

Debt problems have to be addressed early and tackled hard if this final stage of action is to be avoided. One approach that may help is debt consolidation where a new loan is taken with a long repayment period and the proceeds used to pay off high interest debt or loans with high monthly payments. It may also be possible to remortgage the home making the new payment plan more affordable. Whilst this is easier to achieve before debt problems get serious, any debt rescheduling to free up monthly cashflow can make a huge difference to affording the essential bills such as mortgage repayments.

Once the mortgage payment become overdue the lender must send out a formal written notice. This will contain details of the mortgage balance plus any late interest or other fees that have accrued to the account. At this stage the lender will make contact in order to discuss debt problems and listen to any proposals that the borrower may have for getting the account back up to date. At this stage, a remortgage or loan restructure may be considered. It may be that other actions being taken need time to be completed, such as applying for a debt consolidation loan, in which case the lender may hold off further action pending these plans coming into place.

In addition to specific discussions around the mortgage loan, a lender must also advise the borrower of the local council?s housing department and provide a reference to an independent debt advisor. Their involvement in a debt management plan may be sufficient to stave off any action whilst a debt consolidation and management plan is worked out.

In some instances it may not be possible to work out a realistic plan to catch up on arrears. In these cases it may be necessary to consider selling the property and using the proceeds to pay off any outstanding loan. This can be a better approach than simply handing the keys to the lender since you are likely to get a better price as a sitting owner rather than the lender as a distressed seller. Remember that the lender is still liable for any shortfall so obtaining the best price is to the lenders advantage.

Even if all the actions taken are insufficient to prevent court action being initiated by the lender there is still a good chance that repossession can be avoided. There is still time to negotiate a solution with the lender particularly if the debt problems are of a short term nature. At this stage, the borrower should get professional advice and support since even a court action does not mean automatic repossession. There are numerous defences that can be offered including incomplete or incorrect procedures being followed, asking for time to apply for benefits that would clear some or all of the arrears or that it is proving difficult to find somewhere to live. Other personal factors may also be relevant that will persuade the court not to grant a repossession order.

Even though there may be numerous debt problems that have led to a failure to make mortgage payments it does not mean that the family home has to be repossessed. Every personal circumstance varies and getting all the details known plus an attitude of wanting to address debt issues in a positive way can prevent losing the family home. Professional advice is essential as is early action to address debt problems so as not to end up threatened with a repossession order.

Want to find out more about Debt Consolidation, then visit Tony Sprake?s site on how to choose the best way to deal with bankruptcy.

Source: http://bankruptcy.financenewstoday.com/avoiding-repossession-in-hard-financial-times/

james frey paper acl bohemian grove stephen hawking bill o reilly jim jones