What does repossession mean?

Repossession refers to the legal process through which a lender takes ownership and control of a property or asset that was pledged as collateral against a loan when the borrower fails to meet their loan obligations. It is a measure taken by the lender to recover the outstanding debt owed by the borrower.

In the context of mortgages, repossession specifically refers to the lender reclaiming the property securing the mortgage loan.

Here’s an overview of how the repossession process typically works:

1. Default on Mortgage Payments: Repossession proceedings are usually initiated when the borrower falls significantly behind on their mortgage repayments and fails to address the arrears despite various attempts by the lender to resolve the situation.
2. Legal Action: The lender will typically apply to the court for a possession order, which is a legal order granting them the right to take possession of the property. The court will assess the case, considering factors such as the amount owed, the borrower’s circumstances, and any defenses raised.
3. Possession Order: If the court approves the lender’s application, a possession order is issued. This order provides a specific timeframe for the borrower to vacate the property voluntarily, usually several weeks or months.
4. Eviction: If the borrower does not comply with the possession order or fails to reach a suitable alternative arrangement with the lender, the lender may proceed with eviction. Bailiffs, acting on behalf of the lender, will enforce the possession order and remove the borrower from the property.
5. Sale of the Repossessed Property: After repossessing the property, the lender typically aims to sell it in order to recover the outstanding debt owed by the borrower. The property may be sold through an auction or a private sale, depending on local market conditions and lender practices.

It’s important to note that repossession is considered a last resort by lenders, and they are typically required to follow strict legal procedures and guidelines. However, repossession can have significant consequences for the borrower, including losing their home and potential damage to their credit history, making it harder to secure credit in the future.

If you find yourself facing repossession or are concerned about the possibility, it is crucial to seek professional advice from a housing counselor, legal professional, or organizations specializing in debt and housing matters. They can help explore options to avoid repossession, negotiate with the lender, or provide guidance on how to navigate the process.