It was probably on a question of time before we saw this sort of thing happening.
There has been a big rise in the number of banks that are trying to secure loans and credit card debt against borrowers’ properties.
The number of lenders seeking court orders to secure personal debt against property reached 131,644 last year; that’s a 42% rise year-on-year. Unfortunately this trend is yet another sign of the pressures many of you with debt are now facing.
Mark Sands of the accountants KPMG said:
‘You take on an unsecured loan or credit card, you fall into arrears, the bank decides to take you to court, and if you still don’t pay you end up with a charge imposed on your house by the court. Lenders are looking at all options to get their money back.’
While the applications for ‘charging orders’ have increased 42% over a year, the growth over two years (2005-2007) is nearer to 100%.
- What are charging orders?
Charging orders are effectively a second mortgage on your home and give your creditors security for their loans if they find you are having trouble repaying the money.
John Fairhurst of the debt advisory company Payplan; said:
‘Lenders are worried about people’s ability to repay and a charging order gives a guarantee to the lender that at some point in the future they will get their money back. A charge on a home does not immediately compel the debtor to sell their property and the lender usually hopes to be repaid when a home is eventually sold by the borrower.
‘What’s quite difficult for a creditor to do is to follow that [charging order] through to repossess the house; repossessions as a result of charging orders are extremely rare.’
If you are having debt trouble and are having problems making your repayments, you should speak free of charge to a debt adviser who can provide you with advice and solutions to help you resolve your debt and credit problems.
Also if you are struggling with your finances then do not panic. You can seek advice and support from these organisations:
Consumer Credit Counselling Service
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April 30th, 2008 at 2:04 pm
I run a company some years ago, and was sent bust via a supplier going bust and not paying my copany, but then my back took me to court and got a order for me to pay, even when the account was with a LTD co, and not me, but as i was not living at the house at the time, i did not know about it, till they took me back to court and got a order on a new house that i got, now they are going to get the money from me and i am going to lose me house, this is not right as they never give me chance to goto court and the time i went about it, the Judge said there was nothing she could do for me, I feel that the bank has took a underhanded play in this matter, and they will take any action they can to get there money, even when its not right.