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Why not speak your mind below
New rules proposed to tighten up on charging orders
Page last updated Thursday, 25 February 2010
The Ministry of Justice is considering proposals to offer greater protection to home owners by setting a minimum amount of debt before a court can order the sale of a home.
Lenders can apply for a charging order to convert unsecured borrowing, such as car loans or credit card debts, into loans 'secured' against the home of someone who owes them money. Once a charging order has been used in this way the lender can then force the homeowner to sell their home to pay back the debt.
At the moment, creditors can apply for a charging order only where a debtor has incurred a county court judgment and has fallen behind with the repayment instalments agreed when the judgment was made.
If the debtor then falls into arrears with repayments, the creditor can immediately use the charging order to ask the court to force a sale of the debtor's home.
Under the new proposals The Lord Chancellor will set a minimum threshold of debt – this could be as low £1,000 but as yet unconfirmed - below which a charging order or order for sale may not be issued. The aim is to protect homeowners struggling with small amounts of debt from losing their properties but those with bigger debts could be adversely affected.
There were more than a million county court judgments in 2006 and debt advisers are worried that any change in the law, which includes clarification on charging order procedure, could result in a flood of applications for charging orders from lenders keen to recoup cash as a result of the credit crunch. This in turn could lead to a sharp rise in the number of debtors forced to sell their homes.
My comment
I have been saying for years that there is no such thing as 'an unsecured debt' because a charging order can quickly change its status from unsecured to secured.
My concern is that lenders will start to enforce a charging order by applying to the court to repossess the home on which the order is secured as soon as the borrower falls behind with payments, even though the debtor is paying something back, albeit a reduced amount than previously agreed, each month to the lender.
Another growing practice is for debt recovery agencies to purchase the debt from the original lender and then apply for a charging order.
If house prices continue to fall, there is a risk that an increase in charging orders will push many home owners further into negative equity and any more house repossessions will further depress an already ailing housing market.
I strongly feel that the ceiling level of unsecured debt needs to be set at a reasonable level in order to ensure that the proposals do not result in many more consumers facing the disastrous consequences repossession.
Marie Saturday, 03 April 2010
Interesting that you were able to go to court Darren. I have just returned forms for a similar matter. Been on a DMP for 9 months, not missed a payment then suddenly debt moved to optima laegal and CCJ applied for. Can I go and state my case, it went through Northampton bulk claims?
Darren (Guest) Friday, 26 February 2010
Charles your observation regarding CCJ's is not necessarily correct. In order to obtain a Charging Order I beleive that the creditor firstly needs a CCJ.
So regardless as in my own case where I was paying the creditor via a DMP for over 12 months they decided that they wanted to secure the debt by the way of a Charging Order and duely applied to the court for a CCJ with a view to getting a forthwith order knowing full well I could not pay forthwith(or else why would I need a DMP) they would get a Charging Order by my default on that forthwith order.
I did not at any stage show any resistance to paying nor deny the debt. I paid according to affordability which was only some £50 short of the contractual payments this I maintained seemingly to no avail as far as the creditor was concerned.
Fortunatley the District Judge was having none of it and dismissed the creditors claims outright ordering me to maintain the DMP as is.
Thankfully common sense prevailed and my faith in Judges was wholly restored.
I did however fully cooperate with the court proceedings and did attend at all of the hearings to put forward my case I think had I not the Judge would have gone with the creditor for ease and quick resolution if nothing else.
Charles (Guest) Thursday, 25 February 2010
Surely though if a person has a CCJ against them, then there has been a reluctance to offer payments in the first place. I am a debt advisor and make sure that correct proposals are put forwards to creditors to stop them going to court. I would represent anybody at court free of charge if they were taken to court after my proposals had been made.
I know that it can be a 'head in the sand' scenario when you get into debt. I have been there. But a court can only listen to the evidence that is put in front of it. When a creditor turns up for court to place a charge on a property, then some responsibility must be put onto the individual to inform the court and make proposals for further reduced payments if they have for example been made redundant. How many debtors or their respective DMC's take the time to turn up at court having filed a response.
The jury is out!
Gerald Monday, 15 February 2010
it seems that all the creditors want to do is make you homeless in order to get their money surely there must be a better way to help when credit card companys were often at fault in the first place by always increasing the credit limit with the market as it is at the moment they would be unlikey to get much out of it anyway
