Jump to content
House Price Crash Forum
cashinmattress

Lenders Try To Repossess Homes For Credit Card Debt

Recommended Posts

Lenders try to repossess homes for credit card debt

Borrowers' homes at risk after huge increase in lenders demanding to secure debt against properties

Debt charities have attacked high street banks for repossessing homes to recover debts of just a few thousand pounds.

Thousands of borrowers struggling to repay credit cards or personal loans are at risk of losing their homes because lenders are increasingly keen to secure debts against a borrower’s property, Citizens Advice warned today. The charity has reported a huge increase in the number of charging orders made against homeowners struggling with unsecured debt.

David Harker of Citizens Advice said: “Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. The law leaves debtors far too exposed to unfair treatment and the risk of losing their homes.â€

A charging order secures a debt against a property, and allows creditors to apply for an “order for sale†to recover the debt by forcing a sale of the property. It means borrowers could lose their homes over potentially very small sums of money.

Since 2000 there has been a 722 per cent increase in the number of charging order applications, according to the Ministry of Justice. Around 74 per cent of the 132,000 applications made in 2007 were agreed by the courts.

The law currently states that creditors can only apply for a charging order if the borrower has a county court judgment (CCJ) and has been ordered to settle the entire debt and has not paid, or the borrower has been ordered to pay in installments and has missed a payment.

However, Mr. Harker said: “We are now seeing cases that suggest charging orders are being granted even when these circumstances do not apply. Both creditors and judges are working round existing legal safeguards for debtors.â€

Lenders frequently initiate court action even if a borrower has arranged a debt repayment plan with a charity such as Citizens Advice, whereby a borrower arranges to make smaller, more affordable monthly repayments. Around 600,000 borrowers are now in debt repayment plans, according to Credit Action, the charity.

Chris Jary of Action for Debt, a debt advisor, said: “Charging orders are now very common and in some cases this will lead to an order of sale. A client from Bradford recently had an order for sale on his house to recover an unsecured loan debt of £12,000. Some orders for sale have been made for debts as little as £4,000.

“It seems particularly iniquitous given that nowhere on the paperwork of a personal loan or credit card does it normally say your house will be repossessed if you do not keep up repayments.â€

Many orders for sale are also made by debt purchase companies, who buy default credit accounts from banks and finance companies. Mr Harker said: “These companies are looking to maximise returns and may not be restrained by the same reputational concerns as some high street lenders.â€

The Government has already announced a number of schemes to help homeowners struggling with mortgage payments to avoid repossession, including the Homeowner Mortgage Support Scheme, which allows households to defer interest payments for up to two years. However, no extra protection has been offered for homeowners struggling with unsecured debt.

“A number of changes are needed to enforcement legislation to ensure that charging orders and orders for sale become a last resort,†said Mr Harker.

Damn right. Money owed.

No free ride in Britain.

Share this post


Link to post
Share on other sites

Perhaps the banks realise that the Govt is so hell-bent on propping up negative equity indebted house 'owners' that they know they cannot go after people for being behind on the mortgage... Govt owns banks and Brown has told all the debt monkeys that they will be safe in their homes... so the banks go after the house via the credit card debt...

Share this post


Link to post
Share on other sites

On the one hand I support the money borrowed, money owed idea that these people should pay. The lenders aren't completely innocent in all this tho:

Unsecured Loan

They are generally more expensive than mortgages due to the higher risk (i.e no collateral) and are advertised as being secured on nothing. There are cheaper secured loans available for people with equity.

If the lenders wanted peoples houses upon default then they shouldn't have made unsecured loans available to start with.

Share this post


Link to post
Share on other sites
On the one hand I support the money borrowed, money owed idea that these people should pay. The lenders aren't completely innocent in all this tho:

Unsecured Loan

They are generally more expensive than mortgages due to the higher risk (i.e no collateral) and are advertised as being secured on nothing. There are cheaper secured loans available for people with equity.

If the lenders wanted peoples houses upon default then they shouldn't have made unsecured loans available to start with.

+1

If I extend credit to a business and they go pop, it's just a bad business debt that I have to stand in line for, with everyone else, with the administrator.

Share this post


Link to post
Share on other sites
+1

If I extend credit to a business and they go pop, it's just a bad business debt that I have to stand in line for, with everyone else, with the administrator.

THis is not entirley these peoples problems, we have a debt based banking system which needs to create credit or there is little or no money. The banking prostitutes were all smiles as they handed out billions to people in the form of credit. I average sheeple in the street whom read the Sun, Mirror, watch East enders and corrie, big Brother and i'm a celebrity thought the good times would roll for ever, they are not economists and the banks twisted there arms to borrow and payed big ass bonuses to there sales people!

The people to blame flame and attack should be government - and Banks and regulators!

I see riots as the economy continues to collapse - where are our resident numpties, Mcmarsbar, Riona and sibles?

Or are they looking out the windows at the green shoots? Flucking ass clowns!

Share this post


Link to post
Share on other sites
On the one hand I support the money borrowed, money owed idea that these people should pay. The lenders aren't completely innocent in all this tho:

Unsecured Loan

They are generally more expensive than mortgages due to the higher risk (i.e no collateral) and are advertised as being secured on nothing. There are cheaper secured loans available for people with equity.

If the lenders wanted peoples houses upon default then they shouldn't have made unsecured loans available to start with.

It's not the loan that's being secured, it's the judgment.

Maybe we should do away with judgments. Nobody pays them anyway. Just like banks pay no heed to the regulations.

The practical side of this is that NOBODY gets their home sold for anything less than £10,000 - the courts just don't go for it. And anyone on a debt plan is looking at paying off their unsecured debts in 20-150 years. Seriously. The trick is that a payment of a few pence per month resets the limitation period for suing on the debt, even as the interest racks up - so a CC debt may be doubling every two years, and the debtor is still on the hook. If the creditor goes for judgment the interest rate is usually the statutory one - 6% - and the limitation period is set on the date of last payment. But the CAB people always recommend the former option.

Who's propping up that system of forebearance? Monsieur le Taxpayer.

p.s. What about small lenders, family friends? Do they have to take it like a man and do without security as well?

Edited by okaycuckoo

Share this post


Link to post
Share on other sites
Chris Jary of Action for Debt, a debt advisor, said: “Charging orders are now very common and in some cases this will lead to an order of sale. A client from Bradford recently had an order for sale on his house to recover an unsecured loan debt of £12,000. Some orders for sale have been made for debts as little as £4,000.

Doesn't seem little to me. I'm sick of this big fat moral hazard the guvmunt is creating. As someone on here used to say - F+ck you, pay me.

Edited by Simples

Share this post


Link to post
Share on other sites

Aopart from the fact that credit cards are a mad fantasy to begin with, there is the problem that if you change an unsecured loan to a secured loan then the original interest rate needs looking at.

otherwise, you get 20%+ interest rated unsecured loans that are actually as safe as houses. :lol:

Share this post


Link to post
Share on other sites

I can see people with nothing to lose and the prospect of their house being sold to pay off a CC debt actually cancelling their insurance and setting fire to the place. There's not much value in a burnt out house.

Share this post


Link to post
Share on other sites

I'd be interested to learn how many charging orders are leading to orders of sale, and if this has increased recently.

There was another 'shock, horror, the feckless chavs who binged on consumer tat on their CCs are actually being asked to pay for it!' story about charging orders for CC debt a while back, but it gave the strong impression that in the overwhelming majority of cases, lenders were happy to wait until the property would have been sold in the normal course of events rather than force a sale straight away. At that time it was being presented as homeowners being forced to stay put and not move.

If they are getting more aggressive about sale orders, then unless the properties in question have a lot of equity in them, I'm a bit surprised. After all, the CC lender will become behind the mortgage lender in the queue to be paid back, and if the property is already in NE, they'll get fook all.

Share this post


Link to post
Share on other sites

Let me just repeat what I've said on here a hundred times:

THERE IS NO SUCH THING AS AN UNSECURED LOAN.

The law's changed in April 2006.

Converting an "unsecured" load to a "secured" loan doens't even need you to see a judge anymore. You just print a list of names, addresses and amounts off, fill out a simple cover page, and get it stamped by the clerk of the court.

It's amazing to me that no-one f*cking gets this into their heads... this is why the debt binge carried on after 2005 and into 2007 and 2008. the banks had the government over a barrel. They were going to PULL ALL UNSECURED DEBT and collapse the economy and the government was forced to cave in and change the laws in the lenders favour, effectively making all debt secured against vast equity in peoples houses.

THIS IS WHAT KEPT THE DEBT BUBBLE GOING FROM 2005 ONWARDS.

Share this post


Link to post
Share on other sites
I'd be interested to learn how many charging orders are leading to orders of sale, and if this has increased recently.

Very few. I don't have the figures, but my impression is that lately nobody is applying for orders for sale.

There was another 'shock, horror, the feckless chavs who binged on consumer tat on their CCs are actually being asked to pay for it!' story about charging orders for CC debt a while back, but it gave the strong impression that in the overwhelming majority of cases, lenders were happy to wait until the property would have been sold in the normal course of events rather than force a sale straight away. At that time it was being presented as homeowners being forced to stay put and not move.

That's exactly what's happening.

If they are getting more aggressive about sale orders, then unless the properties in question have a lot of equity in them, I'm a bit surprised. After all, the CC lender will become behind the mortgage lender in the queue to be paid back, and if the property is already in NE, they'll get fook all.

My view is that most of these charging orders will be worthless - unless HPI kicks in soon!

There is WAY too much debt out there.

p.s. Taxabuser - you are nuts.

Edited by okaycuckoo

Share this post


Link to post
Share on other sites
Let me just repeat what I've said on here a hundred times:

THERE IS NO SUCH THING AS AN UNSECURED LOAN.

The law's changed in April 2006.

Converting an "unsecured" load to a "secured" loan doens't even need you to see a judge anymore. You just print a list of names, addresses and amounts off, fill out a simple cover page, and get it stamped by the clerk of the court.

It's amazing to me that no-one f*cking gets this into their heads... this is why the debt binge carried on after 2005 and into 2007 and 2008. the banks had the government over a barrel. They were going to PULL ALL UNSECURED DEBT and collapse the economy and the government was forced to cave in and change the laws in the lenders favour, effectively making all debt secured against vast equity in peoples houses.

THIS IS WHAT KEPT THE DEBT BUBBLE GOING FROM 2005 ONWARDS.

Link?

Share this post


Link to post
Share on other sites
If you borrow money, you have to pay it back. It's not a new idea,

Damn that seems evil, can't I just keep the money?

I mean it was profit in my house that I had and the bank did give it to me no questions asked.

Share this post


Link to post
Share on other sites
I'd be interested to learn how many charging orders are leading to orders of sale, and if this has increased recently.

There was another 'shock, horror, the feckless chavs who binged on consumer tat on their CCs are actually being asked to pay for it!' story about charging orders for CC debt a while back, but it gave the strong impression that in the overwhelming majority of cases, lenders were happy to wait until the property would have been sold in the normal course of events rather than force a sale straight away. At that time it was being presented as homeowners being forced to stay put and not move.

If they are getting more aggressive about sale orders, then unless the properties in question have a lot of equity in them, I'm a bit surprised. After all, the CC lender will become behind the mortgage lender in the queue to be paid back, and if the property is already in NE, they'll get fook all.

I've run a debt management company for 6 years & probably dealt ~ 50 cases where unsecured creditors have obtained judgement, then charging orders. (prevented a few too) Not one forced sale (so far) The creditors seem happy with just the security and to continue to receive monthly payments until the client sells/remo's in which case they are settled (equity providing of course.........)

Edited to add... part of the reason the lenders do this is to promote fear

Edited by Breck

Share this post


Link to post
Share on other sites
Aopart from the fact that credit cards are a mad fantasy to begin with,

Agreed - though I suppose we have them for historic reasons because when they started (early 1960s?) they were a replacement for the old 'on account' system for the middle classes that caused a lot of problems for small traders. I don't think racking up big debts was the original idea. There's absolutely no reason for them now though with debit cards, other than to snare people into debt.

Share this post


Link to post
Share on other sites
Agreed - though I suppose we have them for historic reasons because when they started (early 1960s?) they were a replacement for the old 'on account' system for the middle classes that caused a lot of problems for small traders. I don't think racking up big debts was the original idea. There's absolutely no reason for them now though with debit cards, other than to snare people into debt.

Getting cash back on your purchases.

Share this post


Link to post
Share on other sites
Getting cash back on your purchases.

I've never understood why this isn't extended to debit cards.

OT, my dad used to have a secretary who worked part-time for the CAB. She was forbidden from dealing with debt-cases, since she always ended up losing her temper with the feck-wits.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   291 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.