If your mortgage is not paid, the money owed is called ‘mortgage arrears'. Mortgage arrears are 'priority debts', which means the consequences of not dealing with them are serious - there is a risk of losing your home.
How to get back on track
- Make a list of all your debts and identify the most important that you need to tackle first, such as your mortgage, gas, water and electricity charges.
- Write down all your income and expenses and work out a personal household budget to help you decide how much you can afford to pay to each of the people you owe money to
- Consider seeking advice from a debt advice agency such as the National Debtline
- Most importantly, talk to your mortgage company – try to reach an agreement about paying off the arrears but do not agree to pay more than you can afford.
Basic rules when faced with arrears
- Always contact your creditors (the people you owe the money to) and let them know that you are having difficulties. They may agree for you to pay a reduced amount.
- Do not ignore letters and telephone calls from your creditors. The problem will not go away - it will get worse the longer you ignore it.
- Do not borrow more money to pay off your debts without first thinking very carefully about it. Borrowing more money may only get you further into debt and if you take out a loan from a loan or finance company, you may be charged very high rates of interest, storing up further trouble for the future.
- Decide which of your debts are the most important and make sure that you tackle these priority debts first. Priority debts are usually those which can mean losing your home, having your gas, water or electricity disconnected, or going to prison. Once you have made offers to repay your priority debts, if you have any money, left over you can allocate this to repay any other remaining debts.
- Always reply to letters from the court and try to attend all court hearings so that you can give your version of events and make sure that the court is fully aware of your financial situation.