http://www.telegraph.co.uk/finance/p...red-debts.html
Borrowers face repossession over unsecured debts
Borrowers who have fallen behind on repayments on unsecured debts face losing their homes because of court orders allowing the debts to be converted to secured loans, a charity has warned.
There has been a huge rise in the number of applications for these "charging orders" as lenders increasingly use them as a tactic to intimidate debtors into paying unaffordable amounts, according to a report from Citizens Advice.
Charging orders convert unsecured borrowings into debts secured against people's homes. If payments on a secured loan are not maintained, the lender can apply for a repossession order and recover the debt by forcing the sale of a property.
"Since 2000 there has been a staggering 722pc increase in the number of charging order applications," the charity said. "The most recent figures available from the Ministry of Justice reveal that 74pc of the 132,000 applications made in 2007 resulted in charging orders being agreed by the court."
Lenders were using the threat of charging orders as a "business practice" to "intimidate people in financial difficulties to pay more than they can reasonably afford", Citizens Advice said. Some of its branches had reported that creditors were also asking courts to enforce charging orders through an order for sale, the charity added.
It said the law covering charging orders was unclear and warned that some creditors were "testing the legislation" and obtaining charging orders with increasing ease. It added that there was no minimum financial threshold for obtaining a charging order, leaving people at risk of losing their homes over potentially very small sums of money.
The charity called on the Government to review the law and restrict lenders' ability to use charging orders when borrowers were trying their best to deal with their debts.
David Harker, its chief executive, said: "The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors.
"Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors."
He said the charity welcomed a review by the Office of Fair Trading into the use of charging orders but called on the Ministry of Justice to "look at the law and restrict access to enforcement when debtors are doing all they can".
Mr Harker added: "It is vital that people who are doing their best to repay their debts should be protected from further debt collection or enforcement action."
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Never heard of unsecured ->secured before. Seems disgraceful that debt can be retrospectively changed.....
Borrowers face repossession over unsecured debts
Borrowers who have fallen behind on repayments on unsecured debts face losing their homes because of court orders allowing the debts to be converted to secured loans, a charity has warned.
There has been a huge rise in the number of applications for these "charging orders" as lenders increasingly use them as a tactic to intimidate debtors into paying unaffordable amounts, according to a report from Citizens Advice.
Charging orders convert unsecured borrowings into debts secured against people's homes. If payments on a secured loan are not maintained, the lender can apply for a repossession order and recover the debt by forcing the sale of a property.
"Since 2000 there has been a staggering 722pc increase in the number of charging order applications," the charity said. "The most recent figures available from the Ministry of Justice reveal that 74pc of the 132,000 applications made in 2007 resulted in charging orders being agreed by the court."
Lenders were using the threat of charging orders as a "business practice" to "intimidate people in financial difficulties to pay more than they can reasonably afford", Citizens Advice said. Some of its branches had reported that creditors were also asking courts to enforce charging orders through an order for sale, the charity added.
It said the law covering charging orders was unclear and warned that some creditors were "testing the legislation" and obtaining charging orders with increasing ease. It added that there was no minimum financial threshold for obtaining a charging order, leaving people at risk of losing their homes over potentially very small sums of money.
The charity called on the Government to review the law and restrict lenders' ability to use charging orders when borrowers were trying their best to deal with their debts.
David Harker, its chief executive, said: "The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors.
"Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors."
He said the charity welcomed a review by the Office of Fair Trading into the use of charging orders but called on the Ministry of Justice to "look at the law and restrict access to enforcement when debtors are doing all they can".
Mr Harker added: "It is vital that people who are doing their best to repay their debts should be protected from further debt collection or enforcement action."
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Never heard of unsecured ->secured before. Seems disgraceful that debt can be retrospectively changed.....
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