To save your home, be in possession of the facts

Home reposession cases nearly doubled in the first three months of this year, according to debt advice charities, which warn that many homeowners facing court action are not receiving the legal help they need.

Law centres and Citizens Advice report that the number of people seeking help to fend off repossessions is soaring, but some are being turned away because they do not qualify for legal aid, while many more are turning up at court without attempting to get legal advice.
Suman Antcliffe of Burton upon Trent's Citizens Advice bureau says that 17 repossession cases were heard in one county court session a few weeks ago. 'The number has shot up in the past few months,' she says.

She adds that the judge is becoming 'exhausted' with the workload because homeowners are not seeking legal advice beforehand. 'People are coming in totally unprepared and the judge is having to do the sums on their behalf.'

Capitalise, a London-based debt advice organisation, says it has helped 90 per cent more clients in repossession hearings from January to March than in the same period in 2007, while the Sheffield Law Centre reports a 100 per cent increase over the past six months. Nazma Latif, the centre's duty scheme co-ordinator, says: 'The court used to hold a session devoted to repossession hearings once every three weeks; now they hold one every week. Where we would help two or three clients every session, we now help five or six.'

The Isle of Wight Law Centre says it is helping more than twice the number of homeowners it did last summer and is 'struggling to cope with demand'.

Ninety-four of the 230 county courts in England and Wales have legal advice desks, funded by the Legal Services Commission, which are intended to provide last-minute help.

But James Williams, housing solicitor at the Harehills and Chapeltown Law Centre in Leeds, says that not getting legal help well before a hearing can have devastating consequences. 'Someone who gets advice at the door of the court, or no advice at all, is far more likely to see a possession order granted, which takes them a step closer to losing their home. If we have time to go through the paperwork and gather evidence in advance, we can argue for a realistic payment schedule, an adjournment of the possession order or even get the case dismissed.'

Debt advisers report that some lenders adopt aggressive tactics outside the court to persuade unrepresented homeowners to agree to unrealistic repayment deals. Anthea Puran, of the law centre Law for All in Action, says: 'Lenders' agents can be quite bullying, and sometimes their legal representatives approach defendants on the day of the hearing and try to persuade them to agree to a repayment schedule with high monthly repayments they won't be able to afford. The court then grants the lender a suspended possession order, which means a possession warrant is granted if the defendant is unable to keep up the repayments.'

Steve Lewis, who earns £20,000 a year working for a disability charity on the Isle of Wight, was taken to court by Halifax after falling into arrears on his £92,000 mortgage. He stopped work while suffering from depression and, although he had a payment protection policy, did not qualify for a full, ongoing payout because he was not being treated by a psychiatrist. He was then hit by a sharp hike in his mortgage payments - from £480 a month to £730 - after his fixed rate ended in March. He is unable to remortgage because of the arrears. He says the Halifax proceeded with the case even though it knew he was starting a new job the following week.

Lewis was helped by the Isle of Wight Law Centre: 'I couldn't have afforded a solicitor. If I'd gone into court to defend myself, I wouldn't have known what to say, what agreements could be made. Without the Law Centre, I would probably have lost my home.'

Heather Scott, a spokeswoman for Halifax, said: 'We have shown considerable forbearance and have been trying to help Mr Lewis since 2006. The court order is a standard process and is the first step to formalising a payment schedule. As instructed by the court, this is now in place. Unfortunately, we did not know Mr Lewis had secured a new post until the court hearing had taken place.'

Lewis is now paying an extra £30 a month to try to clear the arrears.
Deborah Smith (not her real name), a VAT inspector who lives in London, agreed just before her repossession case to pay an extra £100 a month towards her arrears, but couldn't cope with the payments and has fallen even deeper into debt.

'I sought advice from Law for All about the repossession case, but then panicked,' she said. 'The mortgage company phoned and said: "There's no need to go to court, just pay us £100 a month extra to clear the arrears." I didn't want to go to court, so I said yes, but it was the worst thing I could have done.'

Smith was lent £214,000 - an extraordinary 7.6 times her salary - for a first mortgage, then she and her husband were lent a further £45,000. They managed the repayments of £1,700 a month on their combined take-home pay of £3,000 a month, but when her husband became ill and could no longer work, she fell into arrears of £2,700.

Her lender, GE Money, says it lent her the money because her credit record was excellent and the repayments should have been lower than the amount she was already paying out for her previous mortgage, plus other unsecured debts. However, it acknowledges that she has shown willingness to deal with the arrears and adds: 'The next step for us is to re-establish contact. We are not a real estate company - we will try to find a way that does not involve repossession.'

The Council of Mortgage Lenders, which represents 98 per cent of the mortgage industry, has published a set of principles on dealing with arrears and repossessions, but Vincent Cable, the Liberal Democrats' Treasury spokesman, is sceptical that all lenders will adhere to the guidelines. 'Unless these guidelines are enshrined in law, it is difficult to see what impact they will have on the spiralling number of repossessions,' he said.
Emergency action plan

1) If your debts are overwhelming, make sure you pay the right bills - council tax, mortgage or rent, utilities. Don't make unsecured debt (credit cards and personal loans) a priority.

2) Seek help from Citizens Advice, the Consumer Credit Counselling Service, the National Debtline or other free debt counselling services. Do not turn to an Individual Voluntary Arrangement company that charges a fee.

3) Make sure you are claiming all the benefits to which you are entitled. If you have lost your job, check whether you have any insurance policies which might pay out.

4) Set a budget and cut down on non-essential spending: posh coffees; satellite TV; alcohol; ready-made meals; gym membership; holidays (unless you invest in a tent).

5) Take in a lodger or ask non-dependent children who live at home to make a contribution towards bills and rent.

6) If this still isn't enough, try to sell before you are repossessed.

7) If you end up in court, seek advice before you go in. Some courts have 'last-minute' advice desks, but it is better to arrive prepared and with someone who can argue your case on your behalf.

8) If a possession order is issued, you have 28 days in which to pay or leave. You can pay what you owe up to the 28th day, but after that the court will issue a warrant of eviction, stating when the bailiffs will be round to change the locks.