Unsecured Debt May Still Result in Home Repossession: Charging Orders

An increasing number of homeowners are discovering that unsecured credit cards and loans are being used to compel the sale of their homes to repay the debt. A little known provision in the law allows for unsecured lenders to compel homeowners to sell their homes even though the debt is and was established on an unsecured basis; charging orders.

A charging order is applied for by unsecured lenders and there are cases where a credit card debt for as little as £1,000 have been applied for and obtained which has resulted in the sale of their homes. Lenders seeking to recover debts are increasingly resorting to charging orders to collect the money owed to them; this makes it even more vital for those in debt to seek qualified and independent debt advice before the situation spirals out of control.

The Ministry of Justice is looking at proposals to improve the protections for debtors and consumers and recent strengthening of the legislation providing for charging orders has been rejected as going too far in favour of the banks. Under the proposals which may still be passed, a bank could force you to sell your home without going through the process of obtaining a County Court Judgment – usually the first step in recovery proceedings for a debt.

Even without this disturbing development, charging orders issued have increased 100% last year and the year before that and this rising trend is only going to accelerate as the credit crunch and economic reversal bite deeper and harder.

Charging orders are yet another method of recovering money for which consumers must be aware of; it is absolutely vital that a debtor seeks independent advice at the very earliest stage possible to keep all of their rights intact and their options for recovery from debt alive. The sooner you seek and get professional advice the sooner you will be free to get on with your life without the worry debt issues bring.