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Charging order consultation begins

Monday 8th February 2010

Consumers could get another layer of protection against lenders attempting to reclaim unpaid debts with charging orders on their homes as a consultation is launched today.

The consultation will look into imposing a minimum debt threshold consumers must have defaulted on before a court can order the sale of their property.

Under the current system, property owners who have unsecured debts such as credit or store cards, which they have been unable to pay, can have a ‘charging order' placed against their property to secure the debts. In a small number of cases the charging order is followed by an order for sale, when a judge decides that the property must be sold immediately to settle the unsecured debt.

Justice Minister Bridget Prentice said: “We know that only a small proportion of charging orders result in the property being sold, so it's rare for a debtor to lose their home because of things such as unpaid credit cards. There are currently a number of safeguards in place to protect homeowners, while ensuring the creditors who need to recoup their money are able to do so.

“But it's important that the government considers 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. We're asking for views on whether a minimum threshold should be introduced in law, to prevent this from occurring.”

The consultation will continue until 30 April 2010.

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