Warning issued over new repossession law

15/09/2008

A change to the law could lead to rising home repossessions, experts have suggested.

The new legislation is contained in the Tribunals, Courts and Enforcement Act 2007, which has yet to be enforced.

Currently, people who fall in to credit card or other types of unsecured debt must have had a county court judgement (CCJ) issued against them for non-payment - and then to have fallen even further behind in these repayments - before their creditor can issue a "charging order".

This legal move fixes the debt on to an asset already held by the borrower - their home - and therefore means that the debtor can be forced to sell up in order to pay off their credit card or loans bills.

The change to the law allows the charging order to be issued with the initial CCJ, effectively meaning that the repossessions process is speeded up.

Speaking to the Guardian, Alex McDermott at Citizens Advice said: "There is likely to be a big increase in orders for sale if this change in the law comes into force, because once a charging order is in place, a lender is free to apply for an order for sale as soon as someone falls behind with payments on the loan secured against their home."

Tags; Housing Debt and Bills, Credit Card Lifestyle,

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