Unsecured Loan Companies Too Keen To Issue Charging Orders
New research from the Citizen’s Advice Bureau (CAB) has revealed that a large number of lenders are using charging orders in order to bully borrowers who may be struggling to keep up with their unsecured loan repayments into repaying more than they can realistically afford, rather than trying to help those customers who are facing financial difficulty and require assistance and advice instead of the additional pressure of possibly losing their home due to arrears on an unsecured loan, or other debt.
A charging order can be applied to an unsecured loan debt by the courts and has the effect of securing the loan on an individual’s property, thereby putting their home at risk if they default on the loan, as the lender is able to force the sale of a person’s home in order to repay an unsecured loan debt. CAB have found that a growing number of loan companies are using charging orders sooner than is actually necessary, when a borrower falls into arrears on an unsecured loan and have accused lenders of using this method of court action to frighten people into repaying unaffordable amounts on their previously unsecured debts.
David Harker of CAB said “The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts, but is also unfair to other creditors.
It is vital that people who are doing their best to repay their debts should be protected from further debt collection of enforcement action and from enforcement related costs that are disproportionate to the size of the debt. The current law on charging orders urgently needs reviewing and appropriate protection put in place.”
