How do people get into arrears? It’s worth taking a minute to think about the question – whether you are, or are not in that situation. How do people get into arrears? Sometimes, dealing with the causes will help to resolve the problem, or do away with it altogether.

The majority of threatened repossessions of someone’s home have their root causes in mortgage, loan or credit card debts. These can get out of control at a point when they become unaffordable, due to an unexpected change in circumstances, or basic poor household financial planning.

How do people get into arrears?  Common causes

There may be short term, or more permanent reasons why people find themselves unable to maintain mortgage payments, including:

– Drop in income:  there are plenty of ways this can happen. These include redundancy, a change of job, loss of overtime earnings, a reduction in hours or wages. Or even cuts to salary or social welfare benefits, and loss of child benefit

–  Increase in living costs: a new addition to the family, the costs of raising children, and rising travel or utility costs

– Divorce: separation can impact dramatically on the family household stability and finances

– Illness: a heart attack, accident or deterioration of a family member’s health

– Bereavement: a death in the family reduces household income, and adds the financial stress of paying for a funeral

–  Changes in lifestyle: living and spending beyond your means can lead to a build-up of debts

–  Using income to cover other financial obligations. People divert funds to paying off other debts such as credit cards, loans and or overdrafts, which may appear more pressing, but aren’t in truth

–  Having to deal with a one-off financial problem. These could include  an unexpected car repair, repairing uninsured property damage or serious illness

–  Increase in scheduled mortgage payments due to an increase in mortgage interest rates, or because a fixed term deal has ended.

How did you get into debt originally? 

Look at the initial cause of the problems is useful in determining if this is a temporary or long term situation.

What you could do if this applies to you & what to do about it?

As soon you become aware you will not be able to pay all of your bills in full and on time, you should consider notifying your mortgage lender and the relevant companies. Again, it’s good to talk. Phone the people you owe money and explore solutions like an arranged payment holiday, the freezing of interest or temporarily reducing your monthly payments.

Your mortgage lender has a vested interest in arriving at an acceptable solution. They have an obligation to deal with your situation fairly and reasonably. It also makes sense for them to resolve the situation, rather than go to the expense of repossession. There are certain obligations on lenders before they can go after repossession for mortgage arrears.

When homeowners get into difficulty paying their mortgage, there is often help available to ensure that they can get over any temporary debt problems. If problems with mortgage payments continue, however, it is possible that the homeowner may have to consider selling.  It’s drastic but it can be better than repossession.

With our ever ongoing Quick Property Sale blogs we do hope we can be of help to you and find these of some use.