Repossession

[Tobagostreet]

I need some advice (for a friend - honest guv).

Well its actually for my MIL - her finances are in a sorry state. She's on benefit and struggles every month to pay all bills and mortgage etc. Hates the home she lives in - wants to rent a flat from the local HA, but has negative equity in her home, so can't afford to sell .

We need to know how long does it take to have a home repossessed? Mortgage has been paid up to date, but REALLY thinking about stopping the payments and getting the house repossessed.

She's having loads of trouble off anti-social neighbours etc and is so miserable that she really needs to get out of there (affecting her health). She has MS and is registered disabled - so this stress is the last thing he needs.

We think it would be much less stressful all round to just get the house repossessed and wash her hands of it.

Citizens advice were very little help - and as she has a mortgaged property she doesnt quality for Low Income Bankrupsy...

Any advice?

It depends on her mortgage company. They will start proceedings once the arrears get to a level they are uncomfortable with if they are not satisfied that she can make them good. Some have a policy of starting action after 2/3months arrears, most companies will be unhappy about £3000 arrears (if that is more than 3 months - of course for some people that is less than a month).

In terms of timing, if she doesn't just come to an arrangement with them to hand over the house they will have to comply with the precaution protocol for mortgage possessions which will involve trying to talk to her and make arrangements for eg lower payments. Then they will have to take possession proceedings - reckon on about 4-6 weeks to get to court. If she doesn't fight it in court and says she has no way of making monthly payments etc they will get an order. She could stay and make them get a warrant to evict her or she could go. The council will probably want to see a possession order to rehouse her.

She needs to be aware that even if repossessed she will still be liable to the mortgage company for the debt still outstanding after they have sold it (and they may sell it for a lot less than she reckons its worth) so the debt doesn't go away just because she is repossessed. She won't wash her hands of it. Of course if she can't pay it she could then consider bankruptcy but that is a major move.

Of course she sounds as though she would have priority housing if that happened. You might phone her local council housing department and without naming names find out how they would view her if this happened.

pre-action protocol (aurgh spellcheck!)

Freshmint - thanks for your advice. TBH we think she should consider full bankrupsy, as she has got herself into a really bad situ.

Honestly hadnt considered that she would still be liable for the loss to the mortgage company (though of course that makes sense).

The whole thing is very worrying for her and she has almost lost the independence she once had through the stress/deterioration of her mental health (cant bring herself to leave the house - and seems to be slipping into a depression).

DH will call the housing office tomorrow and will look into bankrupst.

Sad thing is that one of her major worries about taking any action to resolve this is that she wont have an inheritance to leave her grandkids!!!!

Thanks again!

If she goes bankrupt then the house (and all her other assets) will vest in her trustee in bankruptcy. If she is considering that there is no real point in getting repossessed first.

I would strongly advise you to go to CAB or phone the national debt helpline to get some advice

Best of luck

Your MIL's council wouldn't have to rehouse her.This differs from area to area,depends on housing stock.Some will offer a flat and others just B&B.With some councils you could get offered something straight away,other you could be waiting years.
Your MIL would most likely be asked to show proof that she tried everything to avoid losing her house.If the council think she just didn't bother paying her mortgage they could say she made herself homeless,and give her a list of private lets.

Sorry that all sounds horrible.But i wanted you to know that it may not be that easy to get a council property.If your MIL lives by herself she would only be entitled to one bedroom too.

What ever you MIL decides to do, i hope it all works out for her.

Would your MIL have enough money each month to private let if she stopped paying her mortgage? She would probably fail a credit check but if you or DH could act as guarantor it should not matter.

The council still have a duty to help house a person no matter why they were repossessed, they can't refuse help on the grounds of intentional homelessness anymore (changed a few years ago). Shelter will give you more info on this area, they have a helpline and dept for homeowners facing difficulty, they can be very busy so hard to get through to by phone but very much worth the wait as they are fantastic. The problem is the lack of houses/flats so your MIL would not be seen as a high priority for LA housing but there is nothing to stop her going on the list now ready for when her situation changes later.

MIL can just stop paying the mortgage, she could be moved out in 6 months to a years time, it would be a very uncertain time for her though, with the added stress of phone calls from the lender.

If she saw it through though and was repossessed by the lender she could go on to a private let and claim Housing Benifit. If she had saved the money she was paying onto the mortgage she may have enough for a private let deposit. If you helped her time it right she would be settled in her new place by the date that posession was granted so no need to still be in the old house when balifs and locksmiths turn up.

Once she was in the new place the lender would send her a bill and she could file for bankruptcy. Check out the fees in advance and make sure she saves some money for those.

Just make sure you don't pay anyone to sort out the BR etc...there are companies that 'specialise' but they are worth avoiding.

You can get quite a bit of info by looking through the posts on the Money saving Expert bankruptcy forum here.