Lenders Placing Charging Orders on Loans

Fri, 26 Jun 2009

Lenders have come under attack from debt charities for repossessing homes in order to recover small sums of debt . Secured loans are increasingly appealing to lenders in the current market according to the debt charities, leaving banks less exposed to bad loans given the security provided by a property . However, with this measure usually a last resort to recover significant debts, it is alleged that lenders are now repossessing borrowers homes in order to recover small sums.

This has left thousands of borrowers who are struggling to repay debts on credit cards or personal loans vulnerable to losing their homes, according to Citizens Advice, which has reported a surge in the number of charging orders made against homeowners struggling with unsecured debt . These charging orders secure a debt against a property, particularly with unsecured personal loan debt, and enables lenders to apply for an ‘order for sale’ to recover the debt. Despite the raft of interest rate reductions, reducing borrowers repayments, lenders remain anxious to recover their debts in order to boost their capital position.

Since 2000, there has been a 722 per cent increase in the number of such charging order applications, according to figures from the Ministry of Justice. In 2007, 74 per cent of the 132,000 applications made were approved by the courts.
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