Repossession Order
If you do not keep up with your mortgage payments, the lender WILL eventually be able to enforce an eviction order on you and sell the property to recover its capital. As a general rule, lenders do not want to evict occupants.
If you are in arrears, you must contact your lender immediately. It might be possible to negotiate a renewed repayment plan.
Lender Letters
The initial correspondence is likely to be a letter reminding you that you have missed payments. It will usually request you to: confirm when you intend to catch up on arrears, or simply ordering you to contact your lender to discuss your mortgage situation.
If your lender is not satisfied with your proposals, or if your debt and arrears situation worsens, they will probably write to you again. The second letter states that solicitors will be requested to contact you if you do not clear your arrears in total immediately or to make contact to discuss the situation within seven days.
Many lenders are in fact sympathetic to personal difficulties, provided you are honest with them at the earliest stage.
Lender's Solicitor
The lender's solicitors will send you a letter giving you seven days to pay off all your arrears or make a proposal for doing so. If they are not satisfied with your response, they can immediately start court action.
The court is more likely to be sympathetic if you have made an effort to address the problem before legal action was started.
The Possession Order
If letters are ignored, you WILL eventually be served with a county court claim (within six months of the first arrears).
This Order signifies that legal proceedings to repossess your home have begun. At the subsequent court hearing, your lender will notify in detail to the judge that your arrears amount to a breach of contract to make and continue making payments.
If the judge agrees, he will immediately grant the lender possession. That means that you must move out of the home by a date set by the judge. Thereafter, your home will be sold to repay the mortgage. If the sale does not cover all the expenses, (including all arrears, legal and admin costs, bailiffs, etc) then you will still remain personally liable to the lender for such subsequent claims.
Creditor
Someone you owe money to.
Unsecured lending
Total loan & credit card debts excluding your mortgage and any hire purchase.
Country
The country you currently live in.
Insolvency Practitioners
Also known as an IP, a person who specialises in formal insolvency cases.
Valuations
The process of determing the current value of an asset.
Equity
The difference between the market value of a property and the claims held against it.
Lender
Someone you owe money to.
Eviction Order
A court order by which a person may be evicted.
Arrears
An unpaid and overdue debt.
Disposable Income
The amount of income left to an individual after taxes have been paid, available for spending and saving.
Statement of Affairs
A financial report showing assets and liabilities at expected liquidation values and shareholders' equity.
Insolvent
Unable to meet debt obligations.
Secured Loan
Money borrowed using goods or property as a guarantee.