Your account with your lender is “in arrears” when you have missed some mortgage payments for whatever reason. Once you are in arrears, having missed payments for a couple of months or more, your lender is likely to seek court action in order to take steps to regain ownership or “repossess” your property. If you fail to contact your lender and try to reach agreement, the lenders only option to get their money back is to take control of your property and sell it. They must do this through the courts.

Although repossession should be taken seriously, the fact that a lender is taking court action doesn’t mean that its time to throw in the towel. You do have some options but the main thing is to take some action and act quickly. Options to consider include refinancing your property, selling your home or borrowing the money from friends or family to clear the arrears.

Before you decide any drastic measures, the most important thing to do is to talk with your lender. Some lenders are more helpful than others, but help may include extending the term of the mortgage, switching to interest only from a repayment mortgage, or rescheduling the debt in another way. This may prevent the need to go to court. However, even if you can’t agree a suitable solution with the lender, the judge at court is more likely to sympathise if you can show you have tried to solve the situation and not hide from it.

Assuming you do have to go to court, then its worth noting that although serious, its far less formal than you may think. Possession hearings are held in the county court and are in private rooms. The lender is likely to be represented by a legal clerk. You, the lender and the judge will all be seated at a table and generally hearings only last ten minutes. Its your opportunity to explain what’s happened and aim to reach agreement on clearing the debt so you can keep your home.

At the hearing the judge will be looking to identify what you can do to pay off the arrears and meet your commitment for the normal monthly payment. You could offer to pay off all or a significant sum towards the arrears. Clearing the arrears will mean the lender has no reason to possess the property. Another option is to offer to meet further monthly payments in full, with a contribution towards the arrears. In this case the judge may grant a suspended possession order allowing you to keep your home provided you meet this commitment. Whether the judge is likely to grant extra time for options such as refinancing or selling your home will be dependent on how far these have progressed.

Selling your home is an option, though judges will want to see the transaction has progressed and an offer accepted before considering suspending your repossession. A good estate agent will realistically price your property, market it well and check out potentials buyers financial situation to help you achieve a fast sale. Refinancing is an option, though bear in mind this will depend on the speed with which a broker can process your application and find a suitable product. There will be few lenders available to you and the cost may be high over the long term.

If you are granted extra time at court, it generally comes in the form of a suspended possession order. This enables you to keep your home provided you meet the terms of the agreement set out in the hearing e.g. a commitment to make future agreed payments. Alternatively the judge may grant you an extra 28 days with a future hearing after that time to progress whatever solution you have proposed. If however you fail to win the verdict and the lender is granted possession you will generally have 28 days before eviction.

Repossession is a worrying time, but the key is to get as much information and advice as possible. There are a variety of voluntary and charitable organisations available to you free of charge to guide you through the process, answer your questions and discuss your options with you. Such organisations include your local Citizens Advice Bureau, Shelter and National Debtline.