Homeowners can be forced to sell even for unsecured debt

August 4, 2009 · Print This Article

As a result of the increased take up of charging orders by lenders more and more people may be forced to sell their homes even to pay unsecured debts such as credit cards and loans.

Traditionally, forced property sales have been enforced as a result of non-payment of secured loans that have been secured against the home, but one report suggests that over recent years lenders have increasingly turned to charging orders to force the sale of a property to repay an unsecured loan.

There has been a seven-fold increase in the number of charging order applications since 2000 according to the Citizen’s Advice Bureau.

These charging orders can result in the forced sale of a home through the courts even for the payment of unsecured loans. This may prove a particular worry for homeowners in the current climate, with many people falling behind on repayments on unsecured finance due to the difficult financial climate and the ongoing recession.

A report from Citizen’s Advice, entitled Out of Order, goes on to claim that in some cases lenders are threatening homeowners with these charging orders in a bid to make them pay far more than they can reasonably afford to pay.

The charity also warned that lenders are finding it increasingly easy to apply for charging orders, and in the current climate an increasing number of lenders are looking into using this route.

One CAB official said: ‘The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.’



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