Lenders set to pursue debts faster
Lenders set to pursue debts faster
Wednesday 17th September 2008
A change to current rules governing the behaviour of lenders in the Tribunals, Courts and Enforcement Act 2007 will mean that they can secure a charging order as soon as a county court judgement (CCJ) has been issued.
The order enables the creditors to convert unsecured borrowing into loans which are secured against the home of their debtors.
At the moment, they are only permitted to take this step when a borrower has incurred a CCJ and has fallen behind with the repayment instalments agreed when the judgment was made, the Observer reports.
The change will speed up the debt recovery process and could lead to a glut of home repossessions, amid signs that millions of borrowers are already struggling with their mortgage debt in the current economic downturn, according to Alex McDermott, policy officer at Citizens Advice.
He 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."
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