Welcome

If you can’t meet your mortgage repayments, or you’re worried you might fall behind, contact your lender as soon as possible. You can also get free independent advice from other organisations and you may be able to get help with your mortgage from new schemes which started earlier this year as part of a series of government backed initiatives designed to help you.

 

Contact your Lender and agree a plan

 

Mortgage lenders are keen to help their customers sort out any payment difficulties. They may be able to come to a payment arrangement with you.

 

If you’re struggling to make the payments

Depending on your payment history and whether your difficulties are likely to be long or short term, your lender might agree to:

·        Reduce your payments for a set period

·        Charge you interest only for a while, if you’ve got a repayment mortgage (usually you pay capital and interest)

·        Give you a ‘payment holiday’

·        Extend your mortgage term to reduce your payments

 

If you’re already in arrears

If you’ve already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can’t meet the extra payments, you may be able to delay them for a while or add them to your loan. Again, it depends on your track record.

 

Always pay what you can

Pay as much as you can manage every month. Keeping up regular payments (even if they vary) shows that you’re committed. Your lender’s more likely to treat you sympathetically and you’ll minimise the arrears charges too.

You can find more mortgage payment advice from the National Homelessness Advice Service.

 

 

Mortgage Rescue scheme

 

 

 

The Mortgage Rescue scheme may help if you are having serious difficulties making your mortgage repayments and are in danger of becoming homeless if repossessed. Find out if you are eligible for help to stay in your home and how the scheme works.

 

 

What is the Mortgage Rescue Scheme

The Mortgage Rescue scheme is a government scheme, which is run by your local housing authority - the organisation that manages housing for your council. If you are eligible, you could get financial help to stay in your home. You make your application for help from the scheme to your local council.

 

Find Your local Council

 

The Mortgage Rescue scheme is only available in England. Separate schemes are either in place, or being developed, in Scotland, Wales and Northern Ireland. Search your local council’s website for more information about these schemes.

 

 

 

 

 

Who Can Get Help From The scheme?

 

To be eligible for the scheme your household must include someone in ‘priority need’. This could be:

·        a pregnant woman

·        someone with dependent children

·        someone who is vulnerable because of old age or a physical or mental impairment

 

You’ll also need to meet the following criteria:

·        your household must earn less than £60,000 a year

·        the value of your home shouldn’t be higher than certain levels set for each region – ask your council about the level for your area

·        everyone named on the mortgage must agree to be considered for the Mortgage Rescue scheme – although you don’t have to sign a written agreement

·        you must have received debt counselling and advice from a free independent debt adviser at an organisation like the Citizens Advice Bureau or Shelter

·        you should have made arrangements to repay any debts

·        you should have discussed all other options to meet your repayments with your bank or mortgage lender

·        you must have a clear need to stay in your home, which means it’s not practical or reasonable to move somewhere smaller or cheaper

·        your home must be suitable for your needs - for example, there’s not too many people sharing the same space making it unsafe and unhealthy

·        you must not own a second home, including a home abroad

·         

Owners of freehold and leasehold properties who meet these criteria are also eligible for the Mortgage Rescue scheme.

 

 

Help for people in negative equity

You may be eligible for help from the Mortgage Rescue scheme if you are in ‘negative equity’. This is when the amount owed on your mortgage is more than the value of your home. If you are in negative equity, you can apply for the scheme if:

·        you meet all the other eligibility criteria

·        the value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home

 

How the Mortgage Scheme Works

You can be referred to the scheme by:

·        advice agencies, like the Citizens Advice Bureau or Shelter

·        your mortgage lender

·        the courts

You can also contact your local council directly to get advice about the Mortgage Rescue scheme. Find Your local Council

 

When you apply for help from the scheme:

1.     the council will arrange for you to meet with their money advisers

2.     you’ll get advice and a plan to help you manage your debt or some other way that you can meet your housing costs

3.     the council may arrange an assessment of your home

4.     you may get financial help, either with a ‘shared equity loan’ or through a ‘Government mortgage to rent’, depending on your circumstances

 

 

 

 

 

Shared equity loan

The council may involve a Registered Social Landlord (RSL) - an independent housing organisation registered with the Tenant Services Authority. The RSL can provide a shared equity loan, which means they will pay off a proportion of your mortgage. In return they receive a share in your property’s ‘equity’ – the market value of your home minus the outstanding mortgage balance. The RSL will agree on the proportion, which will be based on an assessment of your household’s finances. This will reduce your mortgage to a more affordable level so you can continue to make repayments.

 

Government mortgage to rent

Alternatively, the RSL may suggest a Government mortgage to rent, which means the RSL will pay off your mortgage completely by buying the property. You’ll stay in your home and pay rent to the RSL as their tenant. The rent will be at a level lower than the ‘market rate’ - this will be cheaper than if you were renting from a private landlord.

You’ll continue to receive advice after you have entered the scheme to help you manage your finances.

 

Useful Links

 

Where to get Debt Help

Mortgage arrears or payment difficulties : Directgov - Money, tax and benefits

Jobseeker’s Allowance : Directgov - Money, tax and benefits

Council Tax Benefit : Directgov - Money, tax and benefits

Tax credits : Directgov - Money, tax and benefits

 

Information taken from www.direct.gov.uk

 

Debt Relief Order (DRO)

 

Since April 2009 Debt Relief Orders have been available to people on low incomes who find they are struggling with unsecured Debt’s of £15,000.00 or less and have assets with a value of no more than £300.00.

 

Here we will outline the most frequent questions and provide names of companies who may be able to help you with a Debt Relief Order (DRO).

 

What are the requirements for a debt relief order?

The requirements for DROs are as follows:

•  
  • You are unable to pay your debts;
  • Your total unsecured liabilities must not exceed £15,000;
  • Your total gross assets must not exceed £300;
  • Your disposable income, following deduction of normal household expenses, must not exceed £50 per month.
  • You must be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales.
  • You must not have previously been subject to a DRO within the last 6 years. 
  • You must not be involved in another formal insolvency procedure at the time of application for a DRO, such as:

a) An undischarged bankrupt;

b) A current Individual Voluntary Arrangement;

c) A current Bankruptcy Restrictions Order or Undertaking;

d) A current Debt Relief Restrictions Order or Undertaking;

e) An interim order

f) A current pending debtor’s bankruptcy petition in relation to the debtor but the debtor has not been referred to the DRO procedure by the court as a more suitable method of debt relief;

g) A current pending creditor’s bankruptcy petition against the debtor but the debtor has not obtained the creditor’s permission for entry into the DRO process.

 

How will a DRO be made?

DROs are applied for online, with an approved intermediary helping to complete an application.

Upon receipt of the application and payment of the fee, an official receiver is able to make the order, administratively, without the involvement of the court if it appears that the applicant meets the requirements.

The official receiver is able to refuse to make an order or can choose to delay the decision pending further information from the applicant.

 

What are the effects of a DRO?

During the period that an order is in force, you will:

• Be protected from enforcement action by the creditors included in the application (bar certain creditors whose debts cannot be scheduled in the DRO and those creditors whose debts are included in the DRO but who have successfully obtained leave from the court to pursue their debts).

·         Be free from those debts at the end of the period (normally 12 months from the order).

·         Be obliged to provide information to and co-operate with the official receiver.

·         Be expected to make arrangements to repay their creditors should their financial circumstances improve.

 

As with other forms of personal insolvency, a DRO debtor’s credit rating will be affected and there will be civil and criminal penalties for those who abuse the system.

The official receiver is able to investigate, either on his own account or as the result of an objection from creditors, and is able to revoke the order if the debtor is found to have failed to provide a full and accurate account of their financial affairs (for example, an understatement in their assets or income). Failure to provide such an account may result in civil and criminal sanctions.

 

What restrictions will be placed upon a person who has a DRO?

 For the duration of the order, the debtor will be subject to similar restrictions as in bankruptcy, and their details will be on the publically available Individual Insolvency Register (available at www.insolvency.gov.uk)

These restrictions include the following:

• You must not obtain credit of £500 or more, either alone or jointly with another person, without disclosing that they are subject to a DRO to the lender.
• You may not carry on a business (directly or indirectly) in a name that is different from the name under which they were granted a DRO, without telling all those with whom the debtor does business the name under which they were granted a DRO.
• You may not be involved (directly or indirectly) with the promotion, management or formation of a limited company, and may not act as a company director, without the court’s permission.
• You will only be able to obtain a DRO once every six years. 

Furthermore the official receiver will be able to apply for a Debt Relief Restrictions Order, similar to the bankruptcy restriction order, which will extend the period of restriction for up to fifteen years for debtors who are dishonest or culpable.

 

How can I get a DRO?

By seeking financial advice from a debt advisor and if a DRO appears to be appropriate, an approved intermediary will be able to help you complete the online application. The intermediary may be the same person from whom advice was originally sought, or may be a further advisor that you are referred to once it is considered that a DRO is appropriate.

You cannot apply for a DRO without the assistance of an intermediary.

To apply for a DRO involves payment of a fee which will be less than £100 usually £90.00.

Companies Known to Surviving The Credit Crunch which we are happy to recommends are:

Baines and Ernst

Debt Free Direct

 Gregory Pennington