Loans -
Indebted Britons May Lose Homes - 23/03/2008
|
Increasing concern about the risks of the implosion of Britain’s £1.4 trillion debt mountain has led a growing number of high street banks to resort to the use of court orders to secure unsecured loans against borrowers’ homes.
Reports said many of the banks are using this device against those who default on credit card or personal loan repayments in a bid to protect their weakening balance sheets. And hundreds of thousands of indebted homeowners may lose their homes.
Reports said figures from the Courts Service show that the use of charging orders has risen from 2000 to 2006 by 580 per cent.
Increased application of this tactic to protect unsecured loans became a commonplace since the current credit crisis started last summer, reports said.
Lenders go to the courts to seek charging orders as soon as a borrower misses loan or credit card repayments, and the debt becomes secured against the customer’s home if the judge approves the application. The debt is repaid from the equity of the eventual sale of the home.
The reports added that in extreme cases lenders that obtained a charging order apply to the courts to force the sale of the home.
Rising cost of living and debt obligations are combining to make life very hard for overburdened consumers, expert said.
Recent report said borrowers across the UK owe about £225 billion on credit cards and personal loans and they spend up to 10 per cent of their income on interest payments.
The debt charity, Credit Action’s Chris Tapp said banks have become less willing to write off debt through insolvency agreements and that was why there’s huge rise in charging orders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan quotations are provided by Leadbay
Ltd. Leadbay Ltd is authorised and regulated by the Financial
Services Authority. |
|