Defaulting on a Secured Loan

Borrowers must understand that defaulting on payments for secured finance could result in the lender repossessing their home or any other collateral asset. Should you find yourself struggling to meet payment obligations, it is imperative that you contact the lender as soon as possible. Your lender will be more inclined to help you find a workable solution than to start repossession proceedings, so it is important to be open and honest with them regarding your financial situation.

Falling into arrears

If you find you are having difficulty keeping up with payments on your secured loan, it is important to contact the lender right away to avoid repossession of your property. The following steps are essential:

• Contact your lender as soon as possible.
• Evaluate your outgoings against your income.
• Work out which payments are most important.
• Contacting an independent advisor could be very helpful in assessing your best course of action.
• Arrange an affordable payment plan with your lender.

Most lenders will be willing to come to some agreement and set up a payment plan for those struggling with their payment obligations.

At what point will the lender start court action?

Most lenders only initiate a court proceeding when they have exhausted all other options.

If the lender decides to proceed with court action for any reason, they will invite you to attend the repossession hearing. We will attempt to find a workable resolution during this hearing. If the court cannot find a solution, it will issue a possession order against the borrowers’ property, granting the lender the right to repossess your property on a specified date. 

What happens after repossession?

The lender will sell the property in order to generate enough money to cover the borrower’s debts; however, if the sale does not cover the debt amount, the borrower will still be liable for the difference.