I’m due to appear in court next week about not paying my mortgage. I have been unable to repay my monthly mortgage repayments after losing my job six months ago and am concerned that my family is going to lose its home.
I’ve been too scared to discuss the full extent of my financial difficulties with my lender – indeed, I’ve suffered plenty of sleepless nights as a result – and now find myself facing a judge as I’ve been unable to agree a new payment plan.
What do I need to tell the court to ensure I can keep a roof over my head while I continue looking for work? AS
Appearing in court may provide you an opportunity to avoid being evicted, explains ex-judge Stephen Gold
MailOnline’s Property expert Myra Butterworth replies: I’m sorry to hear about your circumstances.
While the prospect of a court appearance may well be distressing, it may provide you with an opportunity to save the roof over your head.
If you are working hard to find a new job and are able to show evidence in court of this, there are options that a judge can use to support you.
We speak to a former judge about what information you need to share in court to help avoid being evicted and having your home repossessed.
Stephen Gold, ex-judge and author, replies: I sympathise, but head burying under the sand is a bad idea when it comes to mortgage arrears, and engagement with the lender when difficulties arise is important.
Some lenders actually have a heart: not exactly cuddly, though reasonable.
More often than not, there is a real chance that the home can be saved. Remember, too, that it is the court that decides at a hearing whether or not you must leave and not the lender and so ensure you participate at the hearing.
Personal attendance is the best so that the judge can see themselves how seriously you are taking the situation. Also, speak to the free independent expert adviser who should be available at court and who may also be able to accompany you into the hearing and address the judge on your behalf.
If it is impossible to personally attend, ask the court in advance to allow you to take part by phone or video.
Show your good faith by paying the lender whatever you can afford before the hearing, even though that is very close. Don’t ask the lender permission to do this and take to court written evidence that you have paid.
When you get to court the lender’s representative will almost certainly seek you out to discuss what you have in mind. No harm in going along with a chat. They won’t bite – usually.
You might just be able to negotiate a course that suits you. Don’t be intimidated by them. As I said, the court decides.
If you are struggling with your home in tough times, read This is Money’s guide to what to do if you can’t pay your mortgage.
Those due to appear in court should provide evidence of how they intend to clear their debts
One commodity you will need to escape eviction is money. Not necessarily in your hands, but in the pipeline. That’s money to clear the arrears and to pay ongoing mortgage instalments.
It could be coming from a new job, from your father-in-law or from your son who is about to start paying his way.
Have evidence of the intended source of this money with you at court, ideally in the form of the human being who is set to come up with it.
The lender may protest to the judge: ‘Unemployed for six months. Why should we suppose he won’t be unemployed for six years?’
Explain to the judge why you are confident – and look and sound confident – that the tide is about to turn. Ideally, write out a CV and show it to the judge. Do your best to at least fix up some job interviews before the hearing and show the judge evidence of them.
If you may be eligible for the Government support for mortgage interest scheme, which would assist towards your commitment and have not yet applied, make that application immediately and tell the judge about it.
Although the judge will wish to see the arrears paid off… they do have power to allow right up to the end of the mortgage term, even if it is 25 years, for this to be done
Retired judge Stephen Gold
Perhaps you have been unable to secure employment in the same sector in which you were formerly involved. If it be the case, persuade the judge that you are prepared to take work in any industry if it means keeping your home. Prepare a budget on the best and worst case scenarios that will hopefully demonstrate that, once back at work, you could keep up current payments and pay off the arrears within the lifetime of the mortgage.
Although the judge will wish to see the arrears paid off as soon as possible, usually by monthly instalments, they do have power to allow right up to the end of the mortgage term, even if it is 25 years, for this to be done.
An estate agent’s assessment of the value of your home, or a ballpark figure obtained online, could be a clincher for you. If the gap between the value and what it would take to pay off the mortgage is comfortable, that could make the difference between eviction and being allowed to stay put because it would eliminate or reduce any potential prejudice to your lender.
If you have sufficient equity in your home, the judge will be able to say to themselves: ‘If I allow the borrower to stay and they default again, the lender shouldn’t be out of pocket because the likely equity can soak up the fresh arrears.’
Let the judge see the valuation, although if it shows your interest is effectively worth a tenner or less, leave it behind on the bus to court.
The judge will usually have the option of saving you from eviction if that would be justified, whether you have a repayment or interest-only mortgage or a mixture of the two, or are in arrears with a first, second or eleventh mortgage.
What are the available options?
The judge will usually have the option of saving you from eviction. Here is the order menu from which the judge can pick:
- Order you to leave within 28 days
- Order you to leave in a longer period than 28 days if there are special reasons for extending time (for example, because you are trying to sell your home – see more on that below)
- Order you to leave but suspend (paralyse) the possession order so that you can stay put, for as long as you keep up the current instalments and the arrears instalments that are specified
If you satisfy the judge that you have a reasonable prospect of securing employment which would justify the making of a suspended possession order, the probability is that they will adjourn the hearing for at least 28 days to enable you to get that work and prove you are in it next time.
If you perform really well, they may make a suspended possession order there and then in the expectation of you getting the job, and fix the first payment date to coincide with when you will have wages in the bank.
The lender’s representative may say to the judge that they cannot interfere with your contractual obligation to pay what you had agreed when you took out the mortgage on the dates that were set.
However, remind the judge that section 36 of the Administration of Justice Act 1970 permits the court to allow monthly instalments to go unpaid for a period, if it appears likely that the borrower will be able to pay those sums within a reasonable period.
Although a judge will wish to see the arrears paid off, they have power to allow right up to the end of the mortgage term for this to be done
The court will not be able to save you if your mortgage required you to repay the lender on demand – such as a mortgage securing a bank overdraft – or if your mortgage term has come to an end – for example, if you had an endowment mortgage for 25 years, which is at its end, and what the life company pays out is less than the mortgage debt.
On the brighter side, if it is a second, third or subsequent mortgage that is in arrears, the court usually has broader powers to assist you and can make a so-called ‘time order’ to cater for temporary difficulties.
These include reducing the monthly instalments, relieving you for the time being from having to pay anything off the arrears and even allowing payments to be made after the mortgage term has ended. The powers may not exist for certain mortgages taken out before April 6, 2008.
Can I still choose to sell the property?
You may have reluctantly decided that you cannot afford the mortgage and that the property has to be sold. Much better to sell yourself than have your lender sell – probably at auction and maybe to a vulture – after you have been evicted.
You have the right to sell at any point before you are evicted, provided the price will pay off the mortgage. The mortgage arrears and the court case make no difference to that.
It is not a brilliant idea to volunteer your difficulties to a prospective buyer, however, or they may lie in wait until after you are out and attempt to scoop up your home for peanuts.
Ask the judge to adjourn the hearing to give you an opportunity to sell. Your chances of the judge agreeing will be enhanced if you have already placed the property with an estate agent and show proof.
Should the judge refuse an adjournment they may still be prepared to allow you longer in the property, before you have to leave. You have the right to apply to the court to stave off the bailiff even when the deadline for you to move has passed and you have at last got a buyer or your circumstances have changed for the better and the mortgage and arrears have suddenly become affordable.
It may suit you to earn an adjournment of the first hearing on technical grounds. Nothing of which to be ashamed. The judge could adjourn in some cases. (See below for more information).
There is much more in my book. Good luck.
- Stephen Gold is an ex-judge and author of ‘The Return of Breaking Law’ published by Bath Publishing. For more on service charges, go to breakinglaw.co.uk
When can a judge adjourn the hearing?
It may suit you to earn an adjournment of the first hearing on technical grounds.
The judge could adjourn, if asked by you, where:
- The lender has failed to follow a protocol before starting proceedings (unless a buy-to-let mortgage) by sending you various details with a view to an agreement and giving you no less then 15 working days warning that they are going to court
- The court papers have not been sent to you at least three weeks before the hearing
- The lender does not have with them a form called an N123 relating to protocol compliance or certain other documentation that the judge will be looking for
- The lender has not sent you copies of any written evidence it is relying on at least two days before the hearing