Orders for Sale - minimum debt levels?

February 2010

EuroDebt Welcomes Ministry of Justice Review.

Debt expert EuroDebt has welcomed the latest consultation document from the Ministry of Justice (MoJ) which runs until 30 April 2010. One of the aims of the consultation is to gather consumer opinion on whether restrictions should be imposed on the use of 'order for sale' enforcement for Consumer Credit Act (CCA) debts. At its extreme this could be a credit card debt for hundreds of pounds results in you losing your home after the credit card company takes you to court to obtain a county court judgment (CCJ), then a charging order on your property and then finally an order for sale.

"The paper states that Debt Advice agencies have argued strongly that enforcing small debt balances, for example a credit card balance of £1,500, by forcing the sale of someone's home, worth say £200,00, is a 'sledgehammer' approach. There are plenty of other enforcement methods available that are more proportionate and need to reflect the circumstances of the debtor. The threat of losing your home is unfairly distressing for consumers who have taken out unsecured borrowing, especially if the implications were not made clear" confirmed Kevin Still, Director, EuroDebt. "Our experience is that our clients’ are extremely distressed when legal action is taken to put a charge on their property with the veiled threat that the property may have to be sold.

"The good news is that this happens very rarely, but we would like more confidence in the consistency of decisions made by local courts, which the MoJ have highlighted is inconsistent at a regional level".

In June 2009 Citizens Advice published evidence, titled 'out of order' regarding the use of charging orders as a civil enforcement method. The growth of the use of charging orders seems to reflect this with over 128,000 applications for charging orders expected to be confirmed for 2009.

Bridget Prentice, justice minister, said: "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."

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