The Ministry of Justice is looking at ramping up consumer debt safeguards to ensure that only homeowners with a minimum level of debt can have an order to sell their homes made by the courts.
It says that while only a small proportion of charging orders result in the property being sold, with the current economic environment there is the risk that more people could lose their homes because of relatively low amounts of debt.
Under the current system, property owners who have unsecured debts such as credit or store cards, which they have been unable to pay, can have a charging order placed against their property to secure the debts. In a small number of cases the charging order is followed by an order for sale, when a judge decides that the property must be sold immediately to settle the unsecured debt.
Today’s consultation by the MoJ asks whether a minimum level of consumer credit debt should be set in law before an order for sale can be issued.
Bridget Prentice, justice minister, says: “We know that only a small proportion of charging orders result in the property being sold, so it’s rare for a debtor to lose their home because of things such as unpaid credit cards. There are currently a number of safeguards in place to protect homeowners, while ensuring the creditors who need to recoup their money are able to do so.
“But it’s important that the government consider whether there is a risk that the numbers will increase due to the current economic situation, and whether this could result in more people losing their homes because of relatively low levels of debt which they are unable to pay. We’re asking for views on whether a minimum threshold should be introduced in law, to prevent this from occurring.”
The consultation will last until April 30.