More Charging Orders Issued by Courts
Debt charities becoming concerned over increasing trend of issuing 'charging orders'
10th October 2005
Debt charities have warned that the number of charging orders being issued is growing fast, and that they may be becoming standard practice for banks.
A charging order can be issued by the county court as part of the debt recovery process, and means that a debt is 'charged' to your home. When you sell your home and pay off your mortgage, any surplus cash must be used to clear the debt.
Effectively, a charging order converts an unsecured loan or debt into a secured one.
The banks say that such orders are only used as a last resort, but figures show that the number issued has tripled in the last 3 years, and now runs at a rate of 35,000 a year.
Debt charities say that the system can be unfair, as the bank will continue to charge a higher 'risk premium' on the debt even though the risk has been lessened by making it secured.
Read More: BBC : Charities warn on debt recovery
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