What is Voluntary Repossession? Your Next Steps Explained
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.
Are you worried that a bailiff may come knocking at your door? Are you stressed about your property being taken away? You’re not alone. Each month, over 170,000 people visit our website seeking guidance on debt solutions. We understand the fear and stress that comes with these hard times.
In this article, we’ll explain:
- What voluntary repossession means, and how it works.
- Steps to take if you’re considering voluntary repossession.
- The implications of voluntary repossession on your benefits and credit.
- Different debt solutions you might consider.
- Resources for free debt advice in the UK.
Our team is experienced, as some of us have even faced similar situations. We understand the challenges you’re dealing with and will offer guidance on navigating this tough situation. We’ll cover everything from dealing with lenders to understanding the impact on your finances.
Let’s get started on finding a new way forward for you.
What is voluntary repossession?
What are the consequences of voluntary repossession UK?
» TAKE ACTION NOW: Fill out the short debt form
How is the sale price assessed in a voluntary repossession?
What happens when a lender sells your house?
How would a Voluntary Repossession affect your benefits?
What happens when lenders take possession of your home?
How a debt solution could help
Some debt solutions can:
- Stop nasty calls from creditors
- Freeze interest and charges
- Reduce your monthly payments
A few debt solutions can even result in writing off some of your debt.
Here’s an example:
Situation
Monthly income | £2,504 |
Monthly expenses | £2,345 |
Total debt | £32,049 |
Monthly debt repayments
Before | £587 |
After | £158 |
£429 reduction in monthly payments
If you want to learn what debt solutions are available to you, click the button below to get started.
What happens to mortgage payments after your home is repossessed?
Who is responsible for maintenance and repairs?
What happens once your home is sold?
What happens when a sale doesn’t cover all your debt?
Will a voluntary repossession affect my credit?
Yes, any repossession is going to have a negative impact on your credit score.
Your voluntary repossession will be visible on your credit file for 6 years. During this time, you’re probably going to find it pretty much impossible to get credit. If you can get credit, in my experience, it will be a product specifically for those with a bad credit history.
This is because you will be flagged as a ‘high-risk’ customer – someone who has a history of not paying or struggling to repay their debts.
Even if you go through a voluntary repossession, your credit file is going to look very poor to credit companies for at least 6 years.
Could the council help with housing options?
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Can I get a debt solution?
A mortgage is a secured debt which means that you can’t use a debt solution to help pay it off. However, you can use a debt solution to help you manage some of your unsecured debts.
There are several different debt solutions available in the UK, so I recommend speaking to a debt charity as soon as possible. Their advisors will be able to look at your finances in detail and help you work out which debt solution will work best for you.
I have linked a few charities that offer these advisory services for free below.
Debt Management Plan (DMP)
A DMP is an informal debt solution that lets you pay off your debts via a single monthly payment.
Because it is informal, it is not legally binding so you are not tied into a DMP for a minimum number of payments.
Individual Voluntary Arrangement (IVA)
An IVA is a formal agreement between you and your creditors. You agree to pay a monthly sum that is distributed amongst your debts, and your creditors agree not to contact you during your IVA.
IVAs typically last for 5 or 6 years, and any outstanding debt is wiped off when it ends.
Keep in mind that IVAs are not suitable for everyone. You need to owe several thousand pounds to more than one creditor to be eligible. You also need to demonstrate that you have some disposable income every month.
Trust Deed
IVAs are not available in Scotland. Instead, you will need to opt for a Trust Deed.
Trust Deeds work in the same way as an IVA – you pay an agreed sum each month that is shared amongst your creditors, they can’t contact you, and any leftover debt at the end of your Trust Deed term is written off.
Debt Relief Order (DRO)
A DRO is a good option for those facing financial hardship with no assets and little income.
For 12 months, you make no payments, but your creditors freeze your interest and don’t contact you.
If your finances haven’t improved during this year, you may be able to write off your unsecured debts.
Bankruptcy
If you have debts but no realistic possibility of ever paying them off, you may need to declare bankruptcy.
Bankruptcy has an unfair stigma attached to it as it may be your only way of getting a financial fresh start. That said, it is a serious financial situation that should not be taken lightly.
Sequestration
Sequestration is the Scottish version of bankruptcy.
If you have little income and no valuable assets, you may be able to apply for a minimal asset process bankruptcy (MAP). A MAP is a quicker, cheaper, and more straightforward version of sequestration, so worth considering.