Times: Homes at risk as banks seek more security for credit card debt

Papadillos · 2008-03-22T14:07:02+00:00

From The Times March 22, 2008 Homes at risk as banks seek more security for credit card debt James Charles Hundreds of thousands of indebted Britons are at risk of losing their homes if they fall behind on their credit card and personal loan repayments after moves by the high street banks to protect their weakening balance sheets. The banks' increasing concern about the risks of the implosion of Britain's £1.4 trillion debt mountain has led to a huge surge in the number of court orders moving unsecured debt on to a basis that secures it against a borrower's home. Figures from the Courts Service indicate that the use of charging orders by British banks surged by 580 per cent from 2000 to 2006, the most recent year for which figures are available. Industry sources say that the banks' increasing use of the tactic to safeguard loans that they view as risky has accelerated since the credit crunch began last summer. Charging orders are sought by lenders through the courts when a borrower misses loan or credit card repayments. If a judge approves the applications, the debt becomes secured against the borrower's home, to be repaid from the equity of its eventual sale. In extreme cases, lenders who have obtained a charging order apply to the courts to force the sale of the home. Historically, charging orders were used only as a last resort, but solicitors have confirmed that there has been a surge in interest in charging orders. One nationwide law firm that requested anonymity said that it applied for double the number of charging orders in 2007 compared with 2006 for clients that included high street banks. Michael Green, a partner in Weightmans, another firm of solicitors that specialises in debt recovery, believes that lenders are increasingly "twitchy" about bad debt. He said: "If people default on credit card payments or loans, then banks now want more security." In 2000 there were 16,014 applications, rising to 92,933 applications in 2006. These have...

Mar 22, 2008 120 Replies

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Lord Turkey Cough 18 years ago

It's a con trick a way for banks to trick people into homelessness. Nice guys.

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Times: Homes at risk as banks seek more security for credit card debt

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