Yes, unsecured debt, as in credit and store card debt, a personal loan, an overdraft or even a catalogue debt, is not unsecured if you own your own home. A secured debt is of course your mortgage.

Fall behind with say, your credit card payments and the lender, bank or credit card company can now apply to the court, as from 1 October 2012, to put these debts on your house, a bit like a second mortgage, at the same time applying for the County Court judgement (CCJ). Think not? Then read the small print, and at the very end of several pages I daresay there will be some reference to it.

Under the new rules if you then miss any payments under the CCJ the creditor can ask the court for an “order of sale” to force the sale of your home. Previously creditors could apply for a charging order only after a county court judgement has been issued which allowed the debtor to defend such action.

CCJs before 1 October 2012

CCJs granted before this date will be subject to the old procedure, where charging orders are only possible after payments have been missed on a CCJ.

Where is the warning?

So why isn't it made clear, like when you apply for a mortgage, when you are told: Your home may be repossessed if you do not keep up repayments on your mortgage. Shouldn’t new borrowers be told about possible charging orders at point of sale?

Yes, it should be made clear that if the borrower were to default then the lender will most probably now secure the debt on the home, if owned.

Maybe companies don't do it because if they told the customer what could happen if they default on their payments they wouldn't sell as many products.

Falling house prices could see an increase in charging orders as many home owners will be pushed further into negative equity and more house repossessions will further depress an already ailing housing market. If house values were to increase then there is also a risk of an increase in applications for orders of sale if the borrower defaults under the CCJ.

We do not know if there will be a minimum threshold of unsecured debt before a homeowner could lose their home and I would like to see this better defined before an application for an order of sale can be made.

A case of mis-selling debt

I think this is a case of mis-selling unsecured credit on a massive scale, don’t you? How many consumers really understand that the debts they are racking up on credit cards can actually be put on their home if owned? I bet it the vast majority!

Where can I get free debt advice and debt solutions with no fees?

You can either telephone DebtWizard on 0800 197 8433 or click on the following link where you will get access to organisations that also include the debt charities.

Take me to free debt advice agencies.

News item - New rules speed up the way creditors put credit card debts on people’s homes

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