Monday, 13 July 2009

House Repossession Explained

posted by debts.org at 04:39

What is a house repossession?

A home repossession takes place when the mortgage lender takes possession of a house, in order to sell it and recoup money owed by the lender. This course of action is normally taken when the homeowner falls into arrears with the mortgage payments. If a loan is secured on the property, a financial institution can also repossess the house if a borrower falls behind with repayments on a secured loan.Borrowers who are struggling to meet their monthly payments now have more options available to them. You can contact a debt specialist company if you are struggling to make ends meet, and they will explain debt management plans and Individual Voluntary Arrangements, which can be set up to before your debts become too serious.

Home repossession and your options

If you are struggling to meet your monthly mortgage payments, there are several options to help you out. You can renegotiate terms and conditions of the mortgage agreement with your lender, or you can switch to a cheaper mortgage or an interest-only deal. Your lender is not under any obligation to change your mortgage conditions, so you should shop around to find the best deal for you. You could sell the house yourself to pay the outstanding debt, but if this fails, repossession usually follows.

How common is house repossession?

House repossessions soared during 2008, as increasing numbers of homeowners were hit by the credit crunch. The number of house repossessions last year, is reported have risen by 20% to 114,296. But bear in mind, not all repossession orders result in repossession of your house, and it is possible to come to an agreement with your lender before they consider this course of action.

Why are home repossessions on the increase?

A recession is usually accompanied by an increase in house repossessions, as more people lose their jobs, which causes them to fall behind with their monthly bills, including rent and mortgage. The credit crunch has increased the problem of house repossessions, as more people struggle to pay their bills, and rely heavily on credit cards. A sharp increase in interest rates last year also left many homeowners unable to pay increased mortgages.

Repossessed houses and house prices

Repossessed house are normally sold at auction at a knock-down price. Overall this can knock down house prices generally, but when house prices fall, consumers are less willing to spend, and this puts pressure on inflation. If you are starting to struggle with your mortgage, your rent or any other debts which may put your home at risk, you should contact debts.org who can arrange a debt management plan (DMP) or individual voluntary arrangement to (IVA) suit your needs.

Repossessed houses and reasons to choose an IVA

1.You will keep your assets – you will not lose your home or car

2. Protect your privacy – unlike bankruptcy your IVA is not made public

3. Safeguard your job – IVAs don’t stop you from holding certain positions

4. Save money – the arrangement fee is cheaper than filing bankruptcy

5. Prevent legal action – your creditors cannot take you to court

6. Stop harassment – creditors must not contact you directly

7. Reduce debt – an IVA can reduce your debt by up to 70%

8. Give you a fresh start – after five years all remaining debt is cancelled

Reasons to choose a DMP to help your debt problems

1. Cost effective – every pound you can afford to pay goes to your creditors.

2. Stops harassment – creditors deal with us instead of you

3. Debt reduction – interest can be reduced or frozen

4. Flexibility – when your circumstances change so can your payment plan

5. Peace of mind – knowing all creditors on the plan are getting paid

6. No legal implications – the plan is not legally binding

7. Assures creditors – demonstrates you are serious about honouring debt

The number of repossession orders sent by courts in England and Wales between April and June, 2009, compared to the last quarter of 2008, saw an increase of 24 per cent, and the total number of homes repossessed during this period was 28,658. Don´t become a repossession victim if you can avoid it. Never ignore letters or phone calls from the bank or building society, and seek professional advice from a debt solution specialist such as debts.org, who will charge you nothing for an initial consultation.

Labels: Individual Voluntary Arrangements, repossession