Government Must Lead Retreat on Charging Orders
The government must outlaw the increasing use of charging orders by high street financial institutions to recover outstanding debt.
Braintree, Essex (PRWEB) November 13, 2008 -- The government must outlaw the increasing use of charging orders by high street financial institutions to recover outstanding debt.
Sara-Ann Burgess, MD Burgesses
That's the belief of Sara-Ann Burgess, managing director of independent protection insurance specialist Burgesses.
She was reacting to the Monday evening screening of the BBC flagship Panorama programme. It exposed the lengths to which some lenders will go to in order to recover relatively insignificant outstanding loans.
It revealed that in the most extreme cases lenders are using charging orders as the first stage of a process that ends with the debtor being ordered to sell their home in order to repay the debt.
"Making borrowers homeless is at the very least bad business practice and at worst a moral crime," said Burgess.
"Those that are struggling to repay a debt are rarely aware when they receive a charging order that these can be attached to their home and they risk losing the roof over their heads.
"It means that lenders seeking to recover even small unsecured loans could force the sale of the debtor's home rendering families homeless. It's outrageous but it is happening up and down the country."
She is calling for the government to urgently outlaw the practice before many more families are forced onto the streets.
She added: "Lenders are looking to protect their own positions in an increasingly difficult economic climate. To that end they are quicker to take more drastic steps to get their money back.
"Charging orders operate on a first come, first served basis, meaning the lender that moves most quickly to recover an outstanding debt gets first call on the cash. Most people struggling with debt owe a variety of lenders money, that's why we are seeing them move much more quickly down the charging order road."
The numbers of charging orders obtained at the courts have rocketed from 9,500 in the year 2000 to a staggering 97,000 last year.
That figure can only balloon as the economy asset bubble continues to deflate and jobs are lost.
Burgess adds: "Those that bought property at the market peak are most at risk as negative equity returns to blight the economy. Should one partner lose their job making mortgage repayments impossible to meet then it is obvious they can expect no help from banks or other finance houses.
"That's why it is crucial that borrowers seek to protect themselves, should the worst happen, by buying insurance.
"Payment protection insurance to cover a loan or mortgage is a must-have in today's market and very competitive rates are available from independent provides such as Burgesses or British Insurance. Never buy cover from a lender.
"As long as lenders are looking to take your home to recover the price of a new suite or bathroom it is imperative the borrower ensures he or she always buys relevant protection cover at the right price."
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