Returning the court defence form: the deadline

If your mortgage lender has started court action over arrears, the court sends you a defence form. You need to return the defence form before the hearing, and the form is your chance to put your side of the case on paper: what you can pay, what has changed, and what you are doing about the arrears¹.

The form matters because the alternative is a court deciding without your explanation. Before the court date you can also contact the lender directly, or through an advice worker or your solicitor, to propose paying the instalments and clearing the arrears within a reasonable time, and to tell them if you have put the house up for sale or plan to shortly².

Repossession is the end of a long process, not the start of one. Lenders must be fair and reasonable, and repossession should be the last option they consider³. If it does happen, the sale often raises less than the market value, you remain responsible for the shortfall, and the repossession stays on your credit record for up to six years⁴.

Return the defence form before the hearing

The defence form is the document that lets the court hear your position before it decides anything. Shelter's guidance is direct: return the defence form before the hearing¹. If you are defending a county court claim, the form is the one marked N9B in the bottom right corner, titled "Defence and counterclaim"⁷. In Wales the same form is used, and the Welsh-language guidance says you will need to fill in the N9b defence form⁸.

If you are making a partial defence, you complete both the N9A and N9B forms, and both need to be sent to the court⁷. There is a separate admission form, N9C, which comes with the claim form and is used as a response to a return of goods claim⁹.

The form is not the only route. If you want to ask the court for a specific order, you use form N244: tick the box that says "defendant" in section 2, explain in question 3 what order you are asking the court to make and your reasons, tick "yes" at question 5 to have the application dealt with at a hearing, leave questions 6, 7 and 8 blank, then sign the statement of truth, keep a copy and send the form back to the court⁵. Question 11 of that form is where you fill in if you want to make the court aware that you, or someone giving evidence on your behalf, is vulnerable¹⁰.

When lenders start court action for mortgage arrears

Under the terms of most mortgages, a lender can usually start the process after two or three missed payments⁵. Lenders could previously start repossession orders after three months of arrears, but that changed in June 2023¹¹.

Before they go to court, lenders must give you a list of all missed payments, details of the total amount of your arrears, and information about how much you still owe on your mortgage¹². That paperwork is what you use to build your response.

Missing a mortgage payment is treated seriously. Generally, missing a mortgage payment is considered one of the worst types of default, and lenders are likely to be reluctant to lend at any point afterwards¹³. That is why the earlier you engage with the lender, the more options tend to stay open.

If you are in Northern Ireland, the process and the help available are set out separately, and the guidance there covers what happens when a lender takes action against you². In Scotland, the Home Owners' Support Fund is open to homeowners whose bank or mortgage lender wants to begin repossession proceedings in court¹⁴.

Showing the court you are taking steps, including selling your home

The court wants to see that you are doing something about the debt. Lenders should give you the chance to sell your home to pay off the debt, and you must be able to show that you are taking active steps to sell¹⁵.

If you are relying on income from a court or tribunal case, bring a letter from your solicitor explaining whether liability has been admitted, the prospect of winning or settling, the likely amount of damages or compensation if successful, and whether proceedings have been issued and the likely timescale². If the arrears arose because of illness or a medical condition that may prevent you from working or making payments for a period, bring a letter from your GP, consultant or medical social worker explaining your condition².

Bring all relevant documents to court, including all letters from the lender, notes of telephone calls or meetings with the lender, a completed budget form, proof of your salary or benefits, a letter from the estate agent if selling, a letter from the new lender if you have applied for a re-mortgage, proof of a change of circumstances such as a job offer, and proof of money due to you such as backdated benefit or compensation or copies of unpaid invoices².

If you are selling, keep the evidence. Revenue Scotland, for example, will consider documentary evidence such as a copy of the signed disposition of sale, Land Registration documents, a solicitor letter stating the sale and date of entry, a Council Tax bill, a utilities bill or a bank statement¹⁶.

What happens if your home is repossessed and sold

If the court grants possession and the home is sold, it is usually sold as quickly as possible, often for less than the market value, meaning you would owe the bank even more than you would have if you had sold the property yourself¹⁷. That is the practical reason selling it yourself, with the lender's agreement, is usually the better outcome on the numbers.

The sale proceeds do not simply disappear into the lender's accounts. In Scotland, the lender must use the money from the sale to pay off the court costs, estate agent's and solicitor's bills, the mortgage and any second or third mortgages¹⁸. Selling costs are your responsibility, and your solicitor will confirm what these are; these costs are not taken from the sale proceeds¹⁹.

Anything left after the secured debts and costs are cleared comes back to you. Anything short of that becomes a debt you still owe.

Shortfall debt: you still owe what the sale does not cover

If the sale does not raise enough to clear the debt, you are still responsible for repaying the difference, known as the shortfall⁶. You will still owe money to your lender or mortgage indemnity insurer²⁰. The same principle applies across secured borrowing: with a logbook loan, if the sale price does not cover the debt, you have to pay the shortfall²¹, and with hire purchase, if selling does not raise enough to pay off the remaining debt, you will still owe the money²².

The shortfall does not vanish because the home has gone. You will still owe money to your mortgage lender if selling does not pay off the full amount you owe²³. If you had an interest-only mortgage and the term has ended without a repayment plan in place, the same shortfall logic applies to the capital²³.

Where the property is in negative equity, the gap between what it sells for and what you owe is the shortfall, and it survives the sale²⁴. Lenders are not allowed to base an affordability assessment on the equity in the property used as security, or to take account of an expected increase in property prices²⁵, which means a rising market is not a route out of arrears.

Credit rating: a repossession stays on your report for up to six years

When your home is repossessed it stays on your credit record for up to six years⁴. A repossession stays on your credit report for up to six years and can affect your chances of getting credit from other lenders²⁶. Your house being repossessed will affect your credit rating²⁷.

The six-year rule is not unique to repossessions. Information about arrears stays on your credit report for six years²⁸, and some information stays on your credit file for six years, including missed payments, defaults and court judgments³⁰. Car repossession under hire purchase and conditional sale agreements is normally kept on your credit reference file for six years and can affect your ability to get credit³¹.

The practical effect is that a repossession follows you into your next application, whether that is a mortgage, a rental tenancy or a loan. Repossession can affect your housing options, and it might be harder to buy another home or rent privately³². If you are in Scotland and your home is in danger of being repossessed, the Mortgage to Rent scheme is open to applicants in that position³³.

Where to get help

Free, impartial help exists and it is worth using before the hearing, not after. Shelter England publishes guidance on what to do if your lender starts court action¹, and Shelter Cymru covers the same ground for Wales⁸. National Debtline has a guide to mortgage arrears⁵, and StepChange covers mortgage arrears and the court process³⁵. Independent Age has advice for older homeowners at risk of losing their home³, and Housing Rights covers the Northern Ireland position³⁷.

If you are in Scotland, the Home Owners' Support Fund is administered through mygov.scot and is open to homeowners whose lender wants to begin repossession proceedings in court¹⁴. In Northern Ireland, nidirect sets out what happens when a lender takes action².

The Financial Conduct Authority's rules on repossessions apply to lenders, and the rules regarding repossessions are set out in its mortgage conduct handbook³⁹. If you think a lender has not followed the rules, the Financial Ombudsman Service can look at complaints about mortgage lenders.