If you have fallen behind with your mortgage payments, you may eventually receive a warning that your lender is considering court action.

For many homeowners and landlords, receiving a letter mentioning court proceedings can be extremely worrying. It can also be difficult to understand what happens next and whether there is still an opportunity to reach an agreement with the lender.

So, can a mortgage lender take you to court for arrears in the UK?

Yes. A mortgage lender can take court action where mortgage arrears have not been resolved and possession of the property is being sought. However, court proceedings are not normally intended to be the first step. There are rules and procedures concerning communication with the borrower, attempts to resolve the arrears and the steps that should generally be taken before a possession claim is issued.

The exact procedure also depends on where the property is located. The possession procedure discussed in this article is primarily concerned with England and Wales. Scotland and Northern Ireland have different legal and court procedures.

When Can a Mortgage Lender Take You to Court?

A lender may consider court proceedings when mortgage arrears have continued and attempts to resolve the situation have not produced a workable solution.

Being one payment behind does not automatically mean that the lender will immediately take you to court.

There may first be correspondence, telephone contact, requests for financial information, payment proposals and discussions about how the arrears could be dealt with.

The lender may consider whether an arrangement can be reached that allows the borrower to continue making the mortgage payments while also reducing the arrears.

The circumstances of each case are different, so there is no universal period after which every lender must issue court proceedings.

What Should Happen Before Court Proceedings?

The mortgage possession process includes pre-action requirements.

The Pre-Action Protocol for Possession Claims Based on Mortgage or Home Purchase Plan Arrears is intended to encourage lenders and borrowers to resolve mortgage arrears wherever possible without court proceedings.

The Protocol expects both parties to act fairly and reasonably and encourages communication and attempts to reach agreement before a possession claim is started.

A lender should generally provide information about the mortgage and arrears and allow the borrower an opportunity to consider proposals.

Where appropriate, alternatives to possession may also need to be considered.

This can include matters such as extending the mortgage term, changing the type of mortgage, capitalising arrears or other appropriate arrangements depending on the circumstances.

Does the Lender Have to Try to Reach an Agreement?

For regulated mortgages, FCA rules require lenders dealing with customers in payment difficulties to make reasonable efforts to reach agreement over the method of repaying a payment shortfall.

The rules also refer to the desirability of agreeing an alternative to taking possession and, where feasible, establishing a practical payment plan.

This does not mean that a lender has to accept whatever payment a borrower proposes.

It also does not mean that arrears can simply be ignored.

The important point is that the lender should properly consider the customer’s circumstances and the available options.

Our article Can a Mortgage Lender Refuse to Accept a Payment Arrangement in the UK? looks specifically at what can happen when a lender rejects a proposed payment arrangement.

What Warning Should You Receive Before Court Action?

Before starting a possession claim, the lender should normally follow the relevant pre-action requirements.

GOV.UK guidance states that, before a mortgage lender can repossess a home, the lender must tell the borrower how much is owed, consider a request to change how the mortgage is paid and respond to payment offers.

The guidance also states that, where a payment offer is rejected, the lender must give reasons for rejecting it within the applicable period and must give a reasonable amount of time to consider a proposal made by the lender.

The lender must also provide written warning before starting court action.

This is important because receiving a warning that court action may be taken is not the same thing as already having a possession order.

There may still be an opportunity to address the arrears before proceedings are issued.

What If the Lender Has Already Started Court Proceedings?

Starting court proceedings does not necessarily mean that the borrower has lost the opportunity to negotiate.

A borrower may still be able to reach an agreement with the lender after proceedings have begun.

However, once court proceedings have been issued, it is important not to assume that informal discussions with the lender automatically cancel the court case.

GOV.UK explains that even if the lender starts court action, the borrower may still be able to reach an agreement, but the borrower will generally still need to attend court and tell the judge about the agreement unless the court has cancelled or postponed the hearing.

This is one reason why court papers should never simply be ignored.

What Happens When a Possession Claim Is Issued?

In England and Wales, a mortgage lender seeking possession of residential property can bring a possession claim through the county court.

The court process is governed by the Civil Procedure Rules, including Part 55 and the relevant possession procedures.

The claim will normally identify the property, the parties and the basis on which possession is being sought.

The borrower will receive information about the claim and the hearing.

It is important to read the documents carefully and understand the date of any hearing.

If there are errors in the arrears figure, payments have not been credited correctly or there are other matters that need to be raised, these should be considered promptly.

What Happens at the Possession Hearing?

A possession hearing gives the court an opportunity to consider the lender’s claim and the borrower’s circumstances.

The borrower should attend the hearing unless there is a specific reason why they cannot and appropriate arrangements have been made.

GOV.UK states that if a borrower does not attend the hearing, the judge is likely to give the lender the right to evict.

The court may consider financial information and evidence relating to the mortgage and arrears.

This may include payslips, bank statements, evidence of income, information about benefits, job offers or evidence concerning a proposed sale of the property.

If you have reached an agreement with the lender, this should also be brought to the court’s attention.

What Orders Can the Court Make?

A possession hearing does not always result in an immediate order requiring the borrower to leave.

The court can make different types of order depending on the circumstances.

For example, the court may adjourn the case, meaning that the hearing is postponed.

It may make a possession order.

It may also make a suspended possession order.

A suspended possession order can allow the borrower to remain in the property provided they comply with the conditions set out in the order. This commonly involves maintaining the normal mortgage payments and paying an additional amount towards the arrears.

If the borrower complies with the order, the lender cannot simply enforce possession during the period of suspension.

If the borrower fails to comply with the conditions, however, the lender may be able to take further steps to enforce the order.

What Is an Outright Possession Order?

An outright possession order gives the lender a legal right to possession on the date specified by the court.

GOV.UK explains that the date is usually around 28 days after the hearing, although the court’s order and the circumstances of the case determine what happens.

If the borrower does not leave by the date specified, the lender can apply to the court for enforcement.

This is different from simply receiving a letter from the lender saying that repossession is being considered.

A court order is a significant stage in the process.

What Is a Suspended Possession Order?

A suspended possession order is different from an outright possession order.

The borrower may be allowed to remain in the property provided the conditions imposed by the court are complied with.

For example, the order might require the borrower to make the normal monthly mortgage payment plus a specified amount towards the arrears.

If those payments are maintained, possession may remain suspended.

If the borrower misses payments required by the order, the lender may be able to ask the court to allow enforcement.

This is why a borrower should only agree to or accept an arrangement that they genuinely believe they can maintain.

Can You Still Make a Payment Arrangement After Court Proceedings Begin?

Yes, an agreement may still be possible after proceedings have started.

The fact that a possession claim has been issued does not necessarily mean that negotiations must stop.

GOV.UK specifically recognises that a borrower may still reach an agreement with the lender after court action has started.

However, the existence of court proceedings means that the borrower should take the situation seriously.

If an agreement is reached, it should be properly documented and the court should be informed as appropriate.

Do not assume that making a payment to the lender automatically cancels a possession hearing.

What If You Cannot Afford the Proposed Arrangement?

This is an important issue.

A lender may propose an amount towards the arrears that the borrower believes they cannot afford.

The borrower should not simply agree to an unsustainable payment because they are frightened about losing the property.

Instead, the borrower’s financial circumstances should be properly assessed and the lender should be provided with accurate information.

For regulated mortgages, the FCA rules require reasonable efforts to reach agreement over repayment of payment shortfalls and, where feasible, a practical payment plan.

This does not guarantee that a particular arrangement will be accepted.

However, it means that the borrower’s circumstances are relevant to the process.

What If You Want to Sell the Property?

In some cases, selling the property may be considered where the mortgage is no longer affordable and no sustainable arrangement can be reached.

This can be particularly relevant where there is sufficient equity to repay the mortgage and associated amounts from the sale.

The mortgage lender’s position needs to be considered because the mortgage will normally need to be redeemed from the sale proceeds.

If there is insufficient money to clear the mortgage, a shortfall may remain.

Our article What Happens to Mortgage Arrears When You Sell Your Property in the UK? explains the relationship between arrears, the mortgage redemption figure, property equity and potential shortfalls.

Where no reasonable payment arrangement can be made, the FCA mortgage rules also recognise circumstances in which a customer should be allowed a reasonable period to sell the property.

What If You Are Trying to Remortgage?

Remortgaging may sometimes be considered as an alternative to continuing with an unaffordable mortgage.

However, existing mortgage arrears can make obtaining a new mortgage more difficult.

Lenders may consider payment history, credit information, affordability, income, property value and other factors.

If you are considering this route, our article Can You Remortgage With Mortgage Arrears in the UK? explains some of the issues that may arise.

The important point is that remortgaging should not be treated as an automatic solution.

What If You Cannot Afford the Mortgage at All?

Sometimes the problem is not simply that arrears have accumulated.

The underlying mortgage payment itself may no longer be affordable.

This can happen following a reduction in income, changes in household circumstances, increased expenditure or changes to the mortgage interest rate.

If the mortgage payment is fundamentally unaffordable, simply agreeing to pay the arrears over a short period may not resolve the wider problem.

Our article What Happens If You Cannot Afford Your Mortgage Payment in the UK? looks at the steps that can be considered when the mortgage itself has become difficult to maintain.

What Happens If You Ignore the Court Papers?

Ignoring court papers can make the situation considerably more difficult.

If you fail to respond or attend a hearing, the court may make an order without hearing the information you could otherwise have provided.

GOV.UK specifically warns that failing to attend a repossession hearing is likely to result in the judge giving the lender the right to evict.

If you have received court papers, check the hearing date carefully and obtain appropriate advice about your individual circumstances.

Do not assume that the matter will simply go away because you have started making payments.

What Evidence Should You Take to Court?

If you are attending a possession hearing, it can be useful to have clear evidence of your financial circumstances.

Depending on your situation, this may include:

• recent bank statements;
• payslips or other evidence of income;
• benefit information;
• evidence of employment or a new job;
• an income and expenditure assessment;
• evidence of payments already made;
• correspondence with the lender;
• details of any proposed payment arrangement;
• evidence relating to a proposed sale of the property; and
• any other documents relevant to your circumstances.

The precise documents required will depend on the case.

The purpose is to give the court accurate information about your financial position and any realistic proposal for dealing with the mortgage arrears.

Can the Court Give You More Time?

The court may have different options depending on the circumstances and the type of mortgage and claim.

A court may adjourn the case, make a suspended possession order or make another appropriate order.

The Ministry of Justice explains that, in possession cases, a judge may grant outright possession, suspended possession or no possession order, depending on the circumstances.

A suspended order can allow a borrower to remain in the property provided the conditions of the order are met.

This is why attending the hearing and presenting accurate information can be important.

What Happens If You Do Not Comply With a Court Order?

If the court makes a suspended possession order and the borrower fails to comply with its conditions, the lender may be able to ask the court to enforce the possession order.

Similarly, if an outright possession order has been made and the borrower does not leave by the specified date, the lender can take steps to enforce possession through the court.

This can ultimately result in enforcement by bailiffs or enforcement officers.

The exact procedure depends on the order and circumstances.

What About the Mortgage Debt After Repossession?

Losing possession of the property does not necessarily mean that every amount owed to the lender automatically disappears.

If the property is sold and the sale proceeds do not cover the mortgage balance, arrears, interest and relevant costs, there may be a mortgage shortfall.

The treatment of a shortfall can depend on the mortgage terms, the circumstances of the sale and applicable legal and regulatory rules.

This is another reason why borrowers should consider the position carefully before allowing matters to progress to possession and sale.

Keep a Record of Everything

If you are dealing with mortgage arrears and possible court proceedings, keep copies of all correspondence.

This includes letters, emails, statements, payment proposals and responses from the lender.

If you speak to the lender by telephone, make a note of the date, time, department and substance of the conversation.

If you make a payment, retain evidence of it.

If you propose a sale or remortgage, keep evidence showing what steps you have taken.

A clear record can help you understand the history of the matter and may be important if there is a dispute about what happened.

Do Not Assume That Court Proceedings Mean It Is Too Late

Receiving court papers is serious, but it does not necessarily mean that there is no longer any opportunity to resolve the situation.

A borrower may still be able to negotiate with the lender, make a realistic proposal, provide updated financial information or consider another appropriate solution.

However, the closer the matter gets to an enforcement stage, the more important it becomes to act promptly.

If you have received court papers, do not ignore them.

Final Thoughts

A mortgage lender can take court action for mortgage arrears, particularly where arrears remain unresolved and reasonable attempts to find a solution have failed.

However, the process involves more than simply sending a letter saying that the property will be repossessed.

For regulated mortgages, lenders have obligations concerning fair treatment, reasonable efforts to reach agreement and consideration of alternatives to possession. The mortgage possession pre-action process also encourages lenders and borrowers to resolve arrears without court proceedings wherever possible.

If proceedings have already started, there may still be opportunities to reach an agreement, but the court process should be taken seriously.

Attend the hearing, understand the documents you have received, keep evidence of your financial circumstances and do not agree to payments that you know you cannot maintain.

The appropriate course of action will depend on the individual circumstances of each case.

Disclaimer

Immediate Bank Claims is not a firm of solicitors or barristers. We provide independent support, guidance and assistance relating to mortgage arrears, property repossession, LPA receivers, debt matters and related property issues.

The information provided in this article is for general information purposes only and should not be treated as legal, financial or professional advice. Every situation is different, and the application of laws, regulations and procedures will depend on the individual circumstances of each case.

If you are experiencing mortgage arrears, facing repossession proceedings or dealing with a dispute with your lender, you should consider obtaining appropriate independent professional advice regarding your specific circumstances.

This article was correct at the time of publication but should not be relied upon as a substitute for advice on your individual situation.