Threshold introduced for charging orders

[AAD News Feed]

Threshold introduced for charging orders

This is a duplicate of the Blog Entry made on 8th April 2013 12:14.

Creditors can secure a debtor’s property against unsecured debts as low as £1,000 due to new regulations on charging orders which have come into...

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[IF]

Re: Threshold introduced for charging orders

This is so unjust

Charging orders can now be sought for debts of £1,000, as opposed to the higher threshold of £25,000 promised by the government in the Coalition Agreement in 2010.

[Never-In-Doubt]

Re: Threshold introduced for charging orders

Its a feckin travesty.

So an unsecured debt can now be bullied into a secured debt for what, a grand!!!

It's a joke.

[Never-In-Doubt]

Re: Threshold introduced for charging orders

Full text

Creditors can secure a debtor’s property against unsecured debts as low as £1,000 due to new regulations on charging orders which have come into effect.

The Charging Orders (Order for Sale: Financial Thresholds) Regulations 2013 came into effect on Friday 5 April, introducing a threshold on the enforcement method for the first time.

Charging orders can now be sought for debts of £1,000, as opposed to the higher threshold of £25,000 promised by the government in the Coalition Agreement in 2010.

The move has prompted criticism from debt charities over the government’s change of mind and the possibility that the low threshold could lead to a huge rise in charging orders.

“The government has reneged on its promise to keep the threshold at £25,000 and we do not believe there is sufficient justification for these measures” said a spokesperson for Stepchange Debt Charity.

“The likelihood is that we will see more charging orders and this will potentially create a situation in which other creditors take similar action, which in turn places undue stress onto financially vulnerable people”.

But Justice minister Helen Grant told Parliament in January that placing a high threshold on charging orders would encourage creditors to initiate bankruptcies as an alternative.

She said more debtors tend to lose their home in bankruptcy than with charging orders, therefore encouraging bankruptcy was likely to produce a much more draconian outcome for debtors.

However, charging orders have proved controversial in the past.

In January this year, the Office of Fair Trading imposed requirements on Royal Bank of Scotland plc (RBS) and National Westminster Bank plc (NatWest) over their use of charging orders to recover customer debts.

The OFT’s concerns included an apparent failure by the banks to consider customers’ financial circumstances.

The regulator added that the banks were not always taking account of customers’ efforts to repay debts before applying for charging orders.

Alliance and Leicester Personal Finance Limited, American Express Services Europe Limited, HFC Bank Limited and Welcome Financial Services Limited were the subject of separate sanctions by the OFT in 2010 over their use of charging orders.

Charging orders are granted by a court and places a ‘charge’ on a debtor’s property, turning unpaid, unsecured judgment debts into secured debts.

This means the debt must be paid back out of the proceeds of sale when the debtor sells the property.

A creditor which obtains a charging order can also apply to the court for the property to be sold sooner but this only happens in a minority of cases.

[nightwatch]

Re: Threshold introduced for charging orders

Totaly unfair , on the side of the banks again

[fluffystuff]

Re: Threshold introduced for charging orders

Another broken promise by the Government, another slap on the back for the banks!

Time to pack up and leave me thinks.

[Undercover Elsa]

Re: Threshold introduced for charging orders

But Justice minister Helen Grant told Parliament in January that placing a high threshold on charging orders would encourage creditors to initiate bankruptcies as an alternative.

Not if they increased the threshold for bankruptcy petitions to £25K too it wouldn't. What a bloody lame excuse. Disgraceful.

[Miss Muddled]

Re: Threshold introduced for charging orders

Totally unfair...now we know exactly what side the government is on..certainly not our side.

We have a inhitibition order (Scotland) (is this the same as a charging order) on our house since 2007 last payment wil be made in September 2013 can I take this chance and ask.. does anybody know what happens after that, do we have to apply to get the order taking away. It has probably falling off our credit file if not it will soon but not sure if we still have to apply to the land registry to get it cancelled.

[SaltnVinegar]

Re: Threshold introduced for charging orders

Talk about having your cake and eating it.

I would suggest that all 'unsecured' loans now have a warning attached to them the same as secured loans - that is you could lose your home if you do not keep up repayments.

The whole point of an unsecured loan is the higher interest rate charged is meant to reflect the higher risk the lender takes in being able to obtain a return on their investment.

This ruling effectively means there is no such thing as an 'unsecured' loan.

I wonder if creditors could now be pursued under trade description act, or be accused of mis-selling again, if they do not make consumers aware that an 'unsecured' loan could actually become secured if they fall behind with repayments?

[Never-In-Doubt]

Re: Threshold introduced for charging orders

We have a inhitibition order (Scotland) (is this the same as a charging order) on our house since 2007 last payment wil be made in September 2013 can I take this chance and ask.. does anybody know what happens after that, do we have to apply to get the order taking away. It has probably falling off our credit file if not it will soon but not sure if we still have to apply to the land registry to get it cancelled.

Once the inhibition has been discharged, this will be registered in the Register of Inhibitions and Adjudications (ROI).

See here --> Inhibitions - Shelter Scotland

[Never-In-Doubt]

Re: Threshold introduced for charging orders

Talk about having your cake and eating it.

I would suggest that all 'unsecured' loans now have a warning attached to them the same as secured loans - that is you could lose your home if you do not keep up repayments.

The whole point of an unsecured loan is the higher interest rate charged is meant to reflect the higher risk the lender takes in being able to obtain a return on their investment.

This ruling effectively means there is no such thing as an 'unsecured' loan.

I wonder if creditors could now be pursued under trade description act, or be accused of mis-selling again, if they do not make consumers aware that an 'unsecured' loan could actually become secured if they fall behind with repayments?

I think we really need to look at lobbying this..... what harm can it do?

Someone has to start the ball rolling..... why not let that be us?

[fluffystuff]

Re: Threshold introduced for charging orders

SnV, you make some extremely valid points & Niddy, as you say , what harm can it do. If we don't try, we'll never know.

[SaltnVinegar]

Re: Threshold introduced for charging orders

I think we really need to look at lobbying this..... what harm can it do?

Someone has to start the ball rolling..... why not let that be us?

Why not?!

I don't see how the hell a 'product' can be labelled as 'unsecured' when its anything but.

At the very least I think loans should have a warning attached to them informing consumers that a creditor has the option of applying for a charging order against their home in the event of a default.

If you look on almost every lenders website there is NEVER mention of this when applying for a personal loan. If this isn't misleading or mis-selling then I don't know what is!

[Never-In-Doubt]

Re: Threshold introduced for charging orders

I will email Polly Ashford and David Fisher (Director) - Both OFT - and see what they say.....

[5corpio]

Re: Threshold introduced for charging orders

OFT bars RBS debt collecting on homes - posting made in January 2013 AAD news blog posting about charging orders:

Read here: OFT bars RBS debt collecting that puts homes at risk - allaboutFORUMS

If they raised it to £25k the scum that is Rectums & Optima would slowly die a slow death.....

I think a Which? Appeal might be in order....

Read here:
allaboutFORUMS - View Single Post - OFT bars RBS debt collecting that puts homes at risk

Changes to charging orders - allaboutFORUMS
Blog:
Lenders given fast-track to switch your unpaid credit card debt on to your property - allaboutFORUMS