In repossession, a bank or leasing company takes a vehicle away from a borrower who is behind on payments, often without warning. Lenders might send a driver to collect the car, or they may take it away with a tow truck. In some cases, lenders can disable your car by remote control so you can’t drive it until you clear things up.
Borrowers typically receive notification that they’re behind on payments, and lenders must inform borrowers about the consequences.
What your lender has to do before they can take you to court?
Your lender can only take you to court if they complete certain steps, called pre-action requirements:
- give you clear information about the terms of your agreement and the amount you owe
- offer alternative ways of paying to avoid repossessing your home
- not take you to court if you’re taking reasonable steps to stick to your lending agreement
- give you information on how to get debt advice and suggest that you contact your local council to get advice about what will happen if you need to be re-housed.
When the lender repossesses your property to recover the debt, they may decide to sell the property at an auction and will definitely incur legal and estate agents fees. This may add a substantial amount on top of what you owe. Say the property sells in 3 months; you’ll also be liable to continue paying the mortgage amount for this period.
If your financial circumstances are likely to improve, a bridge loan may be able to pay off your lender. You may also be able to get a short-term loan to stop repossession of your house. If not, ask you may want to sell your house quickly before the repossession goes through to save on all those additional charges and avoid court action.
If you have repossession and you are required to attend court:
Your case will go to court unless you’ve opted for voluntary repossession. This is when you leave the property and hand back the keys to your lender – it should always be a last resort.
If your lender is taking you to court to repossess your home, you’ll get:
- a notice from your lender – giving them the right to sell your property
- an initial writing telling you that the lender has made an application to the court
- Even at this stage, it’s not too late to negotiate a repayment arrangement with your lender. If you can, you should keep paying off your arrears, as this will be taken into account if you have to go to court.
The court will decide if you should be allowed to stay in the property or not. So please act fast!