10 August 2013 – Failing To Make Loan Repayments Case Study

On Saturday 10 August 2013, following on from the last show on Heritage FM, Faith Cheok spoke further about some of the consequences, and options, after defaulting on a home loan. That is, when individuals fail to make loan repayments.

Following a default notice, the relevant bank may decide to start court action against the borrowers. Faith described how a bank may commence proceedings in the Supreme Court to repossess a borrower’s home or to get an order to make the borrowers pay the balance of the loan. This is done by filing and serving documents called a “Writ of Summons” and a “Statement of Claim”. It was explained that on being served with a Writ of Summons the defendants (the borrowers) must consider how to respond to the claim. If they have a legal defence, they may wish to defend the bank’s claim. Otherwise they may wish to consider whether they would be better off selling, or allowing the bank to repossess the house, compared to defending the claim. If there is no defence it may be beneficial for the borrowers to negotiate with the bank to allow them time to sell the property.

It was explained that a defence means a legal reason as to why the defendants should not be liable to the bank for paying the loan. This might include reasons such as fraud or a lack of mental capacity when entering the contract, but does not include merely running out of money to make the repayments. If the defendants wish to argue a defence then time is of the essence, as they must enter an appearance within 10-21 days of being served with the Writ of Summons, depending on where they live.