A frugal life is an easy life!

A credit card is an unsecured debt. These are being used more and more to meet monthly payments on people's mortgages.
The idea being, is that people will not fall behind with their mortgage, if they cannot keep up the payments on their credit card, they will not lose their home, as the debt is "unsecured."

A report out today, shows that charging orders - where an unsecured debt is secured against your home - are on the increase, by 722%

Once in place, a court can be asked to action the charging order by the company who request it be placed on the home.
If the court grant the action, then the home would be sold and before any funds are passed to the former owner, any charging orders on the property must be paid.
In one case that I helped with, a high street bank made out that the charging order was just a "formality."
Once in front of the local magistrate, for a debt less than £4000, the solicitor instructed the magistrate that he would be seeking to enforce the charging order in full, ie, forcing the owner to sell their property to pay the company he represented off!

We have already covered how to defend a charging order but for those that are not sure, here is a summary:

• ALWAYS defend a charging order
• Always have the case heard in your local magistrates court
• Always appear in person and make a defence

Points you can make to help your defence (For more details click the link above):

• Offer only what you are sure you can afford, there is no point going back to court in the future or struggling to meet a payment you offered
• Keep your repayment offer, the same as any other creditors that you may have
• To grant a charging order on your property would give an unfair prejudice to any other creditor who did not have a charging order on your home
• Point out that the original debt was unsecured - the company were happy to give you what they gave you, unsecured, why do they require it now?
• As the debt was unsecured, you would have been charged a higher rate of interest upon taking it out and any payments that you have made towards paying it off. Ask for a refund of the difference in interest between a secured product and your unsecured product - they now want to secure the debt, you should get at least their secured debt rating?
• If you have any "administration" charges in the total amount the company are claiming you owe them, only offer a partial admittance, add up your "admin" charges or "late fees" and request that these be taken off the full balance being claimed.
  Point out to the court that you have asked for a detailed breakdown of each charge and as you have not been given one (no company will!) you can only assume that they are making some level of profit from each charge and as such it becomes a penalty charge - which under common law in England and Wales, is unenforceable (as a penalty charge can only recover ACTUAL LOSS and not make a profit)

As with anything legal, if you are unsure about any of the points raised, please seek legal advice or contact your citizen's advice bureau, BEFORE you take any action or decisions.

A 722% increase in charging orders being applied for through magistrates court is a huge amount, be on your guard gang!

Defending a charging order