Its very easy to believe the hype and spin of Banks and Building Societies, the cheerful adverts for 'debt consolidation' loans, but most people do not consider the risks they are taking. The reason is simple: not many adverts tell you to be more cautious with your money! Companies who advertise want you be carefree with your money - and put it in their pockets!

The truth is simple: Interest rates are historically low, even after the recent changes, and house prices will not always go up. Interest rates in the late 1980s were at 12% - and if that were the case today, mortgage payments would be double what they are now.

A whole generation have been brought up to believe three myths:

that house prices will keep going up

that its a good idea to take on debt to pay debt

that repossession only happens to 'bad people'!

The two industries which support TV and newspapers the most through advertising revenue are - estate agents and banks and other companies offering loans or 'debt restructuring'. They will not be pleased if newspapers were cautious about the property market, or warned people about the 'debt time bomb' this country is sitting on!

If you are threatened with eviction - or indeed, if a Possession Order has already been granted to your lender - you are certainly not alone. Undergoing repossession can be incredibly traumatic. The effects on families can be devastating. In 1999 the Joseph Roundtree Foundation reported on some major research into the effects of repossession. (See panel bottom right.)

Feeling ashamed - and even angry at yourself, having found yourself in this position.

Feeling guilty - for the upheaval and stress your family is going through and is yet to face.

Fear and uncertainty - about the future.

Despair - at how difficult it is going to be to get back on the property ladder, to build up your ruined credit rating, or even find suitable accommodation until you are back on your feet.

Research has shown that repossession can lead to stress and depression, which in turn can lead to relationships falling apart, alcoholism and ill health. Dealing with the situation can feel like climbing an impossible mountain, and many people simply fail to cope. The sense of 'powerlessness' can make even the strongest of people feel completely paralysed.

There are some who will advise those threatened. with repossession to let their houses be repossessed. This advice has even been given by workers for one of the 'major advice agencies'. If you are considering this - or believe it to be your only remaining option - please consider the risks and downsides:

You may not get the best price for your home. Despite lenders being required to show that they have done their best to get 'market value', it does not mean this will happen in practice. They are businesses, and are only interested in getting the money they are owed. Consider this: how will you prove what is 'market value'? Will you be prepared to take on a major company in court if you feel you have been hard done by? Will you feel you have the strength for this battle at the same time as trying to rebuild your life after repossession?

There may be a shortfall in the debt after your house has been sold to pay the lender. You will be chased for this 'shortfall'. The remaining debt can be pursued for up to 12 years and is sometimes sold on into the hands of debt collectors.

Quote from the Joseph Rowntree Foundation Report

Some families who had started rebuilding their lives had been "shattered" and "shocked" when, years after the event, they received letters from their lenders demanding thousands of pounds - "We thought perhaps we can start rebuilding our future, and this one [letter] comes, and it was thirty thousand, and that's it, we're done."


Substantial extra costs will be added to the total debt. Legal fees, bank 'administration' fees, even bailiff fees are often added to the total debt owed. You may even be charged an 'early redemption penalty' if the house is repossessed.

The extra costs and practical problems of moving house. If you are repossessed, you will also have to consider the costs of deposits, advance rent, moving fees, setting up utilities, etc. Typically you will have to change address with 30+ agencies and companies. Most people will have to move twice in fact. once to temporary accommodation (such as friends, family or a hostel) and then again to a new home. These costs can spiral into thousands of pounds, can drag on for many months or even years, can cause huge stress, workload and practical difficulties.

Your credit will be seriously damaged. After several years of restoring your credit (and that is by no means an easy thing to achieve), house prices may have increased too high for you to afford a mortgage, or even save up a deposit again.

Future credit will become even more expensive. Even if you do get a mortgage or loan in the future, the interest rates can be much higher. You may have to pay an extra amount as an insurance policy to cover the lender should you become a 'bad debtor' again. Lenders will assume you are much higher risk, since you have already gone right through the repossession process without being able to find an alternative.

Future housing difficulties

As mentioned before, many people who are repossessed will have to make two moves in a short space of time - one to temporary, and one to a more permanent home. Many people accept more or less anything for their second move - because of the stress and pressures of having to live in temporary accommodation.

Waiting for the Local Authority to make an offer can take a very long time. What they consider, and you consider, to be a 'suitable offer', may be two completely different things. Do not expect that because you will be classed as 'homeless' and will have 'high points' to mean you will get something quickly. It all depends on your area of choice, and you will be competing with many others on higher points or who have been waiting longer than you. You may be forced to accept an offer in an area you do not want to live in.

Private landlords will normally want references and maybe reluctant to take on someone who has serious bad debt issues. They will rightly be worried about your ability to pay rent.

Do not expect a quick-fix solution from the Local Authority or private landlords. It may be years until you find a house that you will be happy to call a 'home' again.

The advice to 'go through with repossession' is both risky and creates many practical problems, many long-term as well as short-term. If you are being advised so by someone, consider asking:

What training have you undertaken to give advice to people being repossessed?

How many clients have you dealt with undergoing threat of repossession?

What alternatives are you aware of?

If you are considering a 'sell and rent back' solution, and they are cynical - ask why and what experience they have of clients who have done this? Ask for specific risks and concerns.

Whatever you do, please do not make the ultimate mistake: doing nothing is the surest way to a disastrous outcome.

Benefits

Here are some of the benefits:

Receive a CASH offer after just one viewing. It costs you nothing. No extended trail of visitors viewing!

We pay your solicitor's fee up to £500.

Pay no HIP, estate agency or other fees.

You can sell for any purpose.

We can stop repossession at any time, sometimes even after eviction, and negotiate with creditors.

There is no need to decorate, refurbish or "present" your property. We buy property in any condition.

Complete within 28 days or less or on a date that suits you.

You can rent the property back as a tenant and / or move at the time of your choice.

Your sale is totally confidential. Your neighbours need know nothing.

We give you certainty that the sale will proceed once agreed. There are no chains and our buyers have the finance arranged in advance.

Our buyers are sensitive to your particular circumstances and will try to fit an offer to suit your position and your best interests. A Win-Win deal is the only way to go!

Our service is fast, easy, confidential and free! There is no obligation until you accept our offer.

Quote from the Joseph Rowntree Foundation Report

The social consequences of mortgage repossession for parents and their children

In 1998, an average of 650 households a week were losing their homes through repossession. A qualitative study by Sarah Nettleton, Roger Burrows, Jude England and Jenny Seavers of the University of York has explored its impact on households with dependent children. The researchers interviewed both adults and children who had lost their home through mortgage repossession and who were subsequently rehoused in the social rented sector. They found that the experience can have distressing and enduring social, psychological and health consequences for both parents and their children.

The experience of mortgage repossession and subsequent re-housing was immensely stressful for the families interviewed. This stress was compounded by the protracted administrative processes and procedures of the lenders, the courts and local authorities.

The experience of the processes of repossession impacted upon the lives of families for some time after the event. People described how they did not have any control over the events associated with the repossession, despite the fact that they all worked hard at trying to find solutions to their problems. They had all endured long periods of uncertainty.

Mortgage repossession was often a route to long-term poverty and substantial debt. Women were found to be especially vulnerable in circumstances where the repossession was the result of relationship breakdown.

The experience of mortgage repossession invoked extreme emotional responses and people described the profound sense of loss they felt at losing the family home. Both parents and children often felt ashamed at their move from the status of 'owner' to that of 'renter'.

The experience of repossession had consequences in six main aspects of peoples' lives. It altered: their social status and identity; their personal and family relationships; their health and well-being; the quality of their lives; their future hopes and aspirations; and the lives of their children.

For the full report see
:http://www.jrf.org.uk/knowledge /findings/housing/829.asp