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Greater court protection for homeowners: consultation
05 February 2010
A consultation on whether homeowners who have failed to repay consumer credit debts should have accrued a minimum level of debt before a court can order the sale of their home has been released today.
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.
Today’s consultation asks whether a minimum level of consumer credit debt should be set in law before an order for sale can be issued.
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 consider 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 last until 30 April 2010.
Notes to editors
05 February 2010
A consultation on whether homeowners who have failed to repay consumer credit debts should have accrued a minimum level of debt before a court can order the sale of their home has been released today.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.
Today’s consultation asks whether a minimum level of consumer credit debt should be set in law before an order for sale can be issued.
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 consider 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 last until 30 April 2010.
Notes to editors
- A charging order is a court order allowing a creditor to secure a debt by placing a charge on the debtor’s immoveable property, usually a house or land, although it can apply to shares. A charging order also allows a creditor to apply subsequently to the court for an order for sale. Charging orders therefore provide a means by which a creditor can gain access to any equity a debtor holds in a property.
- An order for sale can be made by a court against a property with a charging order placed on it, allowing creditors to recoup the money owing to them more quickly.
- Orders for sale consultation
