A lot of the time, debt is generalised by the public. The vast majority of people believe that in order to get into debt you have to have a money spending addiction such as gambling, or have to be careless with finances in the first place. This, however, is not necessarily the case.
It is so easy to end up in “debt” – and it can become a downward spiral once you start with a small amount. It could be that you’ve had to pay out for repairs or health expenses and have therefore fallen behind on mortgage payments because of it, or it could even be the case that you’ve become unemployed and are therefore unable to keep up with mortgage payments. It can happen to anybody.
One of the main issues with this is if you’re in debt, you can face having your house repossessed in order to make up the payments. It’s a situation that absolutely nobody wants to be in, but there are some things you can do if you find yourself faced with this.
If you’re in debt and facing repossession or even know somebody who is, here is everything you need to know.
Sell the Property
First off, it might seem like a major stop, but if your debt is beyond repair, then you may have to look into some sale and rent back agreements, and selling your home.
Now, selling your home in a traditional sense can be pricy and slow – we all know that – which can make it impossible for people avoiding repossession to do.
This is where quick sale companies can come in. These organisations claim to buy your property in as little as seven days in cash, usually for a little less than the market value. That’s the price you pay for a quick sale, but they’re often a good solution for those facing repossession.
However, one thing we would advise is to exercise this option with caution. There are legitimate businesses out there that will do exactly as they say, but it’s been reported in the media that over the years, vulnerable home owners have ended up being taken for a ride by scammers who disguise themselves as quick sale companies.
Our advice would be, ensure the company is regulated by the National Association of Property Buyers, and to always read the small print.
Talk to Your Lender
Before making any quick decisions, however, you should always talk to your lender first to find out where you stand with your mortgage payments.
If you’re not too far behind, your lender might be able to offer you something called a “pre-action protocol” in order to help you to keep your home without resorting to going to court. These are the conditions that must be followed in order to go forth with this:
- Your lender has to tell you the exact sum that you owe plus any charges of interest you might have to pay.
- They also need to consider your request to change your mortgage payment routine, and provide proof that they responded to your offer.
- If they do turn down your offer, within ten working days they must explain why that’s the case.
- If you can’t come to a repayment agreement and they plan to take you to court, they then have to give you fifteen days’ written notice.
Your lender may also suggest extending the term of your mortgage, or may accept reduced payments in order for you to start paying off your debt.
Speak with the Local Authorities
If you and your lender can’t come to an agreement and they take you to court, your next step would be to contact the local authorities, who might be able to offer you advice on how to avoid repossession, or put you in touch with someone who can.
It’s also an option with some local authorities that they could buy a stake in the property, or buy it and rent it back to eliminate the possibility of you becoming homeless.
Debt Advice Service
Our final suggestion is to speak frankly with a debt advice service. They are the experts in this field, after all.
A lot of these will offer free and impartial advice, making them accessible for everybody, and will try to help you eliminate the risk of losing your home.
It can feel like an end of the road situation, but remember that there are always options out there – so explore them.