Negotiating a repayment arrangement

This content applies to Scotland only.

Housing laws vary between Scotland and England. This page applies to Scotland only. Get advice relating to England

If you have fallen into arrears with your mortgage or loan payments, you may be able to make an arrangement with your lender to repay your arrears in instalments over a period of time.

You may be able to get help to negotiate a repayment arrangement with your lender from an adviser at a housing aid centre or Citizens Advice Bureau, a money advice centre, your local council or other local advice centre. Use the Advice Services Directory to find agencies in your area.

Make your mortgage, or secured loan, your top priority

Even if you have a lot of debts, it's important that your mortgage is top priority.

Debts such as mortgage arrears (where you risk losing your home) are much more important than debts such as catalogue payments (where you risk losing your credit rating). Debts to utilities companies (where you risk disconnection) are somewhere in between.

An adviser can help you work this out and might also be able to help you negotiate a repayment arrangement. Try to avoid borrowing more money to pay off your mortgage arrears.

Work out your finances

You need to work out your income and expenditure as accurately as possible so that you know how much you can realistically offer to pay. The National Debtline produces a self-help pack you can use to record your incoming and outgoing finances and work out a budget. There's also a useful budget planner on the MoneySavingExpert website.

A specialist debt adviser can help you work out what you spend each week or month and how you can improve the situation. You can get debt advice from the National Debtline or from a money advice centre.

Pay as much as you can

Try to pay as much as you can towards your mortgage arrears, even if it is not as much as your lender is asking you to pay. It will show your lender that you are making an effort to deal with the situation, and will be taken into account if your case has to go to court.

Be realistic about what you can offer to pay. It's best to repay your arrears over a longer period of time and keep meeting your payments. If you offer to pay more than you can afford and miss a payment during the repayment arrangement, your lender is likely to restart repossession proceedings.

Make your lender an offer

You will probably have to make your lender an offer, rather than waiting for them to propose a repayment arrangement, as you will have a better idea of what you can afford to pay.

You should find out who the best person to negotiate with is. If you are not happy with the person that you speak to, ask to speak to their manager. You should confirm any proposals in writing.

What should the offer include?

When you are making a proposal to the lender you should:

• provide information about how the arrears came about (for example, because you were made redundant or became ill)
• mention your previous record of good payment (if appropriate)
• provide full details of your proposals for dealing with the problem
• state how long it will take you to clear the arrears in relation to the remaining term of the mortgage or loan
• explain how your proposals will help clear the arrears
• mention if you have any equity in the property (whether your home is now worth more than it was when you bought it)
• include information about your household's income and expenditure.

What if my lender won't accept my offer?

If your lender won't accept your offer, keep trying to pay what you can. Keep a record of all the attempts you've made to negotiate with your lender and all the suggestions you've made to your lender. If your case does go to court, this will help show that you have been proactively trying to sort out the problem.

You can also apply to the sheriff court for a section 2 order, which will either:

• allow you to remain in the property and repay your arrears, or
• give you time to find alternative accommodation if your landlord gets a repossession order.

If you have a secured loan or second mortgage that's regulated by the Consumer Credit Act, you may be able to apply for a time order, which is a repayment arrangement that is negotiated in court.