This content applies to Scotland only.

Housing laws vary between Scotland and England. Get advice relating to England

The most common reason for repossession is mortgage arrears. However, failure to pay secured loans can also result in repossession. This page looks at these and other less common reasons for repossession.

Mortgage arrears

Most people who borrow money to buy a home will have a mortgage. If you do not keep up to date with your mortgage repayments, your lender can repossess your home so that they can sell it and recover the money owed to them. Lenders must follow the correct procedures and get a court order before your home can be repossessed.

If you are having problems paying your mortgage, there are several options open to you to help you avoid repossession. Don't ignore your problems - if you act quickly, you may not lose your home. The section on mortgage arrears looks at all the options that may be available to you.

Arrears on a secured loan

If you secure a loan against your home, it means that you are using your home as a guarantee that you will pay the loan back. This means that if you don't keep up with your payments, the bank, building society or financial institution you borrowed the money from can repossess your home. A secured loan may also be called a second mortgage.

If you are having trouble keeping up payments to a secured loan, speak to your lender as soon as possible and try to negotiate an affordable payment plan. Most lenders will usually allow you time to make up missed payments before taking legal action.

Before your lender can start repossession proceedings, they must send you a default notice. If your loan is covered by the Consumer Credit Act, you may be able to apply to the sheriff court for a time order. A time order can give you an opportunity to repay your debt and prevent your lender taking further action to repossess your home.

Find out more about secured loans and second mortgages.

Bankruptcy

If you owe a lot of people money and cannot come to a realistic agreement to pay off your debts, bankruptcy may be your only option. If you go bankrupt, any assets you have (including your home) can be used to pay off your debts during a period of two or three years. After this time, most remaining debts you have will be written off, and you will probably be discharged from bankruptcy. However, bankruptcy will have a big impact on your ability to get credit in future, so it is essential to get advice before doing this.

In Scotland, bankruptcy refers to both sequestration (the legal process whereby you are formally declared bankrupt by the sheriff court) and trust deeds (a more informal process in which you voluntarily transfer some or all of your assets to a trustee to administer on behalf of your creditors). It is essential that you get advice since these are two separate processes.

You can find more information and advice about bankruptcy at the National Debtline website.