England // Secured Debt // I have been contacted by a Solicitor
Firstly, don’t panic, receiving a letter from a solicitor is serious but this does not mean your home will be repossessed. It does mean that if you have been trying to forget about your arrears situation, it is now time to act.
Your lender will instruct a firm of solicitors to start Legal action on their behalf due to arrears which have built up on your mortgage account, although it may be an option, repossession is both the solicitors and your lenders’ last resort.
The process is outlined below, however, it is important to engage with any firm of solicitors at the earliest possible stage. The earlier you engage with them, the more options which may be available to you to prevent repossession occurring.
The litigation process
Letter before action
A letter before action for arrears is a formal letter that requests the payment of the arrears outstanding on your mortgage account. It sets out what is owed and provides a set time period, usually 15 working days from the date of the letter in which to pay. This is an essential requirement of the debt recovery process.
A letter before action for full balance is a formal letter that requests payment of the full balance, this is usually used in the circumstances of a deceased borrower when the whole monies become due under the terms and conditions. It sets out what is owed and provides a set time period, usually 15 working days from the date of the letter in which to pay. This is an essential requirement of the debt recovery process.
A Calling up Notice is a legal document which “calls up” the full balance of your mortgage account. This is generally used when the mortgage account has reached the end of its term and there is a balance remaining. The calling up notice is sent prior to any formal litigation action and essentially allows a three month period, however this can vary depending on the terms and conditions. The time period provides time for you to engage with your lender or the firm of solicitors to address the full balance which has become due. The Calling Up Notice will be sent to all parties named on the mortgage account.
Once the time frames stated in the letter have expired it is at this point the solicitors firm will seek their clients (your lenders) instructions regarding litigation action. Should there have been no engagement throughout the time period and the arrears/balance remain outstanding it is likely your lender will commence litigation action through the court by way of possession proceedings.
Possession proceedings involves legal proceedings in which your lender obtains a court order for possession of your property.
Once in receipt of instructions from the client to commence litigation action, the solicitor will send a Claim Form together with a Particulars of Claim to the court issuing possession proceedings. Included in the particulars of claim will be information regarding the arrears/balance on your account. Attached to the claim will also be a statement of account.
Notification from the Court
Upon the Court receiving the Claim Form for possession proceedings they will issue the possessions proceedings and serve you with a copy of the Claim Form together with the date and time of the court hearing date. You will need to check the Claim Form as it will tell you which court the hearing will take place at, this is usually your local court. You will be given at least 21 days’ notice of the hearing date. Prior to the hearing you will also be served with a witness statement from your lenders Solicitors containing all the information they wish to rely upon at the hearing including up to date figures.
During this time prior to the hearing date you may wish to contact your lender to try and reach a payment arrangement or take some independent advice. Please note your lender does not have to agree a payment arrangement with you.
If you have cleared the arrears or balance prior to the court hearing once the payment has cleared the lenders solicitors will notify the court and the proceedings will be postponed generally with the option to bring back. If you fail to maintain payments and the account falls back into arrears proceedings can be reinstated and a further hearing date will be set.
If you agree a payment arrangement with the lender prior to the hearing date this will not stop the hearing from taking place. However, the lender will not seek an outright possession order and will look to obtain a suspended possession order instead. This is discussed in more detail below.
Appearing in Court
Although appearing in court may sound intimidating, it is important that you do attend. You can represent yourself or you can be represented by a legal representative such as a solicitor. Some courts have a representative (often called a Duty Solicitor) who are available to provide help and advice on the day of your hearing. However, it is not guaranteed a representative will be available on the day of the hearing so we strongly advise you seek independent advice prior to the hearing date.
Your case will be listed to be heard before a District Judge or a Deputy District Judge. Your case may not be heard at your allocated time as there will be other cases listed for the same time and it may depend on where you are on the list on the day so you may have to wait.
The hearing will take place in a room called chambers with the Judge, a representative from your lender, and you and your representative if you choose to be represented.
The Judge will ask your lenders representative to speak and provide a history of the account and they will also provide the Judge with the up to date figures and also what Order they are seeking.
The Judge will then ask you or your representative to speak and provide an explanation/defence for the arrears on the mortgage account. This is also an opportunity for you to make any proposals you wish the Judge to consider when making any Order.
The outcome of the hearing will depend on the information presented to the Judge, and could include any of the following examples :-
- Possession in 28 days.
This means after 28 days the lender can instruct the solicitors to request a warrant for possession of the property if the arrears/balance remains outstanding.
- Possession forthwith.
This means the lender can instruct the solicitors to request a warrant for possession of the property immediately.
- Possession suspended upon payment of your contractual monthly instalments (CMI) payment of your mortgage payment plus an additional sum to pay off the arrears each month.
This means a warrant cannot be requested for possession of the property provided you maintain the payments set out in the Court Order and on time. This is order is usually granted when a payment arrangement has been agreed prior to the hearing date or on the day of the hearing when proposals have been made.
- Hearing adjourned until the next available date after a fixed date in the future
A further hearing date will be allocated. This often occurs when the Judge believes there is insufficient time to hear the case and a new and longer hearing will need to be scheduled at a future date.
The claim can no longer proceed, however the lender could instruct the solicitor to commence new proceedings.
The Judge may also give other directions for the parties to take further steps. This often includes a requirement for the borrower/defendant to file a defence or other documents by a fixed date.
If after the 28 days the arrears/balance remain outstanding or you do not maintain the payments set out in the Order, your lender can instruct the solicitors to issue a warrant for possession of the property.
The warrant request is sent to the court and the bailiff will arrange to provide you with a date and time that they will attend the property and take possession. The bailiff will give you at least 7 days’ notice of the time and date of the eviction.
The solicitors will also receive notice of the date and time of the eviction. The solicitors will instruct a locksmith/asset manager to attend the property at the date and time of the eviction to gain entry to the property and change the locks.
Property in Possession
The property will be marketed and sold.
It is very important that you provide the solicitor with your up to date contact details. This will enable the solicitor to notify you once the property has been sold and provide you with a completion statement. There may also be surplus monies due to you following the redemption of the mortgage account.
Agreeing a Repayment Arrangement
Should you have the affordability to make payments to your mortgage account along with being able to contribute to the arrears an affordable repayment arrangement may be entered into. Any repayment arrangement must be sustainable for you and take into account any repayment arrangements already agreed with other creditors or priority bills. Completing an income and expenditure form is the first step to agreeing a repayment arrangement.
Making an Amendment to Your Mortgage Product
Your lender may be able to make a change to your mortgage to allow a period of reduced payments if your change in circumstances is short term.
They may also be able to look at extending the term of your mortgage, however, this would be dependent on your circumstances and affordability.
Please contact your lender to discuss your circumstances and potentially explore these options.
Selling Your Property
At any time during the litigation process, your lender may agree to hold off on proceeding with further litigation action to allow your property to be put on the open market for sale. There will be costs involved with marketing your property as there would normally be and there is no requirement for you to tell any solicitors marketing your property or any perspective buyers that litigation proceedings are ongoing. You must advise the firm of solicitors acting on your lenders behalf that your intention is to market your property and provide evidence of marketing, they will require to provide this to your lender to seek their instructions on holding action.
If you decide you cannot afford to stay in your mortgaged property, you can approach the solicitor dealing with the litigation action to obtain the relevant documentation to voluntarily surrender the property. Regardless of the stage of litigation action you will be required to sign documentation confirming you wish to voluntary surrender and to have left the property prior to signing this documentation.
Contact Your Local Council
If you decide you cannot afford to stay in your property, you should contact your local council to see if they can provide you with alternative accommodation. It is likely the solicitor instructed will have contacted them to advise that someone in their area may be at risk of becoming homeless.
Regardless of your change in circumstances, there are many options available to you once a solicitor has been instructed on your lenders behalf, repossession is not a foregone conclusion. However, you must;
Be willing to engage with the solicitor or your lender at the earliest opportunity.
Be honest with the solicitor or your lender regarding your circumstances.
Seek some independent legal advice on the situation, you can obtain this from places like your local Citizens Advice Bureau.
Address any other arrears situations on other priority bills as a matter of urgency.
Be honest with yourself as to whether staying in your home is a viable option.
Visit the ‘Help Centre’ to see which other sources of help or advice are available to you.
If you have been contacted by Aberdein Considine, please don’t be afraid to pick up the phone to us. Our England based Debt Recovery team are keen to discuss your circumstances with you and find a resolution for both you and your lender.
If you have been contacted by another firm of solicitors, please contact them or your lender as a matter of urgency to prevent further litigation action proceeding.