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Help.considering DMP.have just read this!!
kingston_2730
Posts: 413 Forumite
Could your credit card cost you your home?
Credit Cards, Debt, Loans Jun 30, 2009
Many of us have unsecured debt on credit cards and loans that we are trying to pay off.
But did you know you could face repossession over them?
Yes, worryingly, those of you who have fallen behind on repayments on your unsecured debts face losing your homes because of court orders allowing the debts to be converted to secured loans.
Citizens Advice has reported a huge increase in the number of charging orders made against those of you struggling with unsecured debt.
The rise comes as lenders increasingly use them as a tactic to intimidate you into paying unaffordable amounts.
A judge will normally only issue a charging order in cases where you have failed to meet one or more of your repayments or failed to pay the full amount due at the end of the term.
While a charging order does not mean you must sell the property, your lender can apply to the court for an Order for Sale. If this request is approved, then when the property is sold then the ‘charge’ must be paid first, before you receive any of the proceeds. And because there is no minimum amount on a charging order, it means that you could lose your home over potentially, very small sums of money!
- Speak to a debt adviser with Money Hospital’s independent debt enquiry service
Around 74% of the 132,000 applications made in 2007 were agreed by the courts. The law currently states that lenders can only apply for a charging order if you have a county court judgment (CCJ) and have been ordered to settle the entire debt and haven’t paid; or you have been ordered to pay in instalments and have missed a payment.
Lenders frequently initiate court action even if you have arranged a debt management plan with a charity such as Citizens Advice, whereby you arrange to make smaller, more affordable monthly repayments.
Around 600,000 of you are now in debt management plans, according to the charity Credit Action.
Worryingly, many orders for sale are also made by debt purchase companies, who buy default credit accounts from banks and finance companies. These companies are looking to maximise returns and may not be restrained by the same reputational concerns as some high street lenders.
It said the law covering charging orders was unclear and warned that some creditors were “testing the legislation” and obtaining charging orders with increasing ease.
The charity has called on the Government to review the law and restrict lenders’ ability to use charging orders when many of us were trying our best to deal with our debts.
David Harker, its chief executive, said:
Mr Harker added: “It is vital that people who are doing their best to repay their debts should be protected from further debt collection or enforcement action.”
The Office of Fair Trading (OFT) is currently monitoring the use of charging orders and while they say only a small proportion of lenders who obtain charging orders then go on to make Order for Sale applications, there is nothing to say this won’t increase down the line. If you are being threatened with a charging order, then it’s important you know your rights.
You can get free and independent advice from a variety of sources and we have listed them below.
Credit Cards, Debt, Loans Jun 30, 2009
Many of us have unsecured debt on credit cards and loans that we are trying to pay off.But did you know you could face repossession over them?
Yes, worryingly, those of you who have fallen behind on repayments on your unsecured debts face losing your homes because of court orders allowing the debts to be converted to secured loans.
Citizens Advice has reported a huge increase in the number of charging orders made against those of you struggling with unsecured debt.
The rise comes as lenders increasingly use them as a tactic to intimidate you into paying unaffordable amounts.
- What is a charging order?
A judge will normally only issue a charging order in cases where you have failed to meet one or more of your repayments or failed to pay the full amount due at the end of the term.
While a charging order does not mean you must sell the property, your lender can apply to the court for an Order for Sale. If this request is approved, then when the property is sold then the ‘charge’ must be paid first, before you receive any of the proceeds. And because there is no minimum amount on a charging order, it means that you could lose your home over potentially, very small sums of money!
- Speak to a debt adviser with Money Hospital’s independent debt enquiry service
- Charging orders on the rise
Around 74% of the 132,000 applications made in 2007 were agreed by the courts. The law currently states that lenders can only apply for a charging order if you have a county court judgment (CCJ) and have been ordered to settle the entire debt and haven’t paid; or you have been ordered to pay in instalments and have missed a payment.
Lenders frequently initiate court action even if you have arranged a debt management plan with a charity such as Citizens Advice, whereby you arrange to make smaller, more affordable monthly repayments.
Around 600,000 of you are now in debt management plans, according to the charity Credit Action.
Worryingly, many orders for sale are also made by debt purchase companies, who buy default credit accounts from banks and finance companies. These companies are looking to maximise returns and may not be restrained by the same reputational concerns as some high street lenders.
Are you worried about your debt? Use our free debt enquiry service. We have partnered with a number of trustworthy debt specialists, so you can speak free of charge to an independent debt adviser who can provide you with advice and solutions to help you resolve your debt problems.
- An intimidation tactic?
It said the law covering charging orders was unclear and warned that some creditors were “testing the legislation” and obtaining charging orders with increasing ease.
The charity has called on the Government to review the law and restrict lenders’ ability to use charging orders when many of us were trying our best to deal with our debts.
David Harker, its chief executive, 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. The law leaves debtors far too exposed to unfair treatment and the risk of losing their homes.” “We are now seeing cases that suggest charging orders are being granted even when these circumstances do not apply. Both creditors and judges are working round existing legal safeguards for debtors.”
He said the charity welcomed a review by the Office of Fair Trading into the use of charging orders but called on the Ministry of Justice to “look at the law and restrict access to enforcement when debtors are doing all they can”.“Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. The law leaves debtors far too exposed to unfair treatment and the risk of losing their homes.” “We are now seeing cases that suggest charging orders are being granted even when these circumstances do not apply. Both creditors and judges are working round existing legal safeguards for debtors.”
Mr Harker added: “It is vital that people who are doing their best to repay their debts should be protected from further debt collection or enforcement action.”
The Office of Fair Trading (OFT) is currently monitoring the use of charging orders and while they say only a small proportion of lenders who obtain charging orders then go on to make Order for Sale applications, there is nothing to say this won’t increase down the line. If you are being threatened with a charging order, then it’s important you know your rights.
You can get free and independent advice from a variety of sources and we have listed them below.
Consumer Credit Counselling Service (CCCS) is a registered charity offering free, confidential advice and support to anyone who is worried about debt. Call free on 0800 138 1111.
National Debtline: The helpline that provides free confidential and independent advice on how to deal with debt. Call free on 0808 808 4000.
Payplan: Debt management and free confidential debt advice on resolving debt problems.
Shelter: if you are struggling with the cost of your mortgage or with any other housing problem, call Shelter’s free housing advice line on 0808 800 4444.
National Debtline: The helpline that provides free confidential and independent advice on how to deal with debt. Call free on 0808 808 4000.
Payplan: Debt management and free confidential debt advice on resolving debt problems.
Shelter: if you are struggling with the cost of your mortgage or with any other housing problem, call Shelter’s free housing advice line on 0808 800 4444.
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Comments
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OMG :eek:.I have just read this and am freaking out!! This is just the kind of thing I have been worried about in considering taking out a DMP!! While many of you on here say that you won't lose your home on a DMP, there are others posting to say they are being taken to court etc....and then I read the above on another website!! I am so confused...please help!!!0
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It's one thing that scares me too and so far in 2.5 years on my dmp, I've not been threatened with a CO or court action yet.
I think it does say somewhere in the small print of unsecured loan agreements that your home could be at risk if you don't keep up payments. Trouble is, not many of us read the small print.Debt 30k in 2008.:eek::o Cleared all my debt in 2013 and loving being debt free
Mortgage free since 20140 -
Please calm down.
Firstly, even IF a charging order was put on your home, only 0.4% of charging orders ever result in an order for sale.
There are ways of preventing COs anyway
Secondly, if you have already got the default letters, we can tell you if they are legally compliant. If they are not, or you have a legally invalid CCA on a pre-2007 card, you can defeat any legal action.If you've have not made a mistake, you've made nothing0 -
By the way, either of you joint tenants in the property?If you've have not made a mistake, you've made nothing0
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Please calm down.
Firstly, even IF a charging order was put on your home, only 0.4% of charging orders ever result in an order for sale.
There are ways of preventing COs anyway
Secondly, if you have already got the default letters, we can tell you if they are legally compliant. If they are not, or you have a legally invalid CCA on a pre-2007 card, you can defeat any legal action.
Are most CCA's pre 2007 invalid? Don't know much about it but most of our ccs were taken out prior to 2007.0 -
kingston_2730 wrote: »Sorry, I'm not sure what you mean by joint tenants?
Do you own the house or do you have a partner with whom you jointly own the house?kingston_2730 wrote: »Are most CCA's pre 2007 invalid? Don't know much about it but most of our ccs were taken out prior to 2007.
The law chaNGED IN aPRIL 2007. This means that the enforceability rules apply more strictly to cards taken out before then. Some are routinely dodgy; I have seen few Cap 1 CCas that are legally compliant and MBNA are poor as well.If you've have not made a mistake, you've made nothing0 -
My husband and I own the house together...big mortgage, negative equity! The cc debt is in both our names so DMP would have to be joint.0
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kingston_2730 wrote: »My husband and I own the house together...big mortgage, negative equity!
In which case the creditor will soon work out that a charging order is a waste of their time and effort.kingston_2730 wrote: »The cc debt is in both our names so DMP would have to be joint.
If the cc debt was in single names, you could avoid paying any Co that was put on the house anyway.
Have you requested the CCAs for all the cards?
Checked for PPI?
Checked the Default letters are compliant?If you've have not made a mistake, you've made nothing0 -
In which case the creditor will soon work out that a charging order is a waste of their time and effort.
If the cc debt was in single names, you could avoid paying any Co that was put on the house anyway.
Have you requested the CCAs for all the cards?
Checked for PPI?
Checked the Default letters are compliant?
So if husband were only on DMP and not myself, it would be less likely that they could take house? Neither of us has started on DMP yet but majority of cc debt is in husband's name. It may be possible for him to take out DMP in his name only and I continue to pay my cc off if that would make it more difficult for them to get charging order?0
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