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MoJ calls for minimum level of debt before courts repossess

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.



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  • Tony 5th February 2010 at 2:43 pm

    Frankly unsecured lending should mean exactly that, after all they charge a much higher rate for such lending than secured lenders charge, the difference being the “risk” factor. If they are able to turn unsecured loans into secured loans they are receiving the risk premium (perhaps double the rate or more) without accepting the risk of having no security in the event of default. It’s shocking that thay can get the support of a judge by having them set a charging order against a main residence, or any property in fact, given that the loans are risk rated in this way.