Charging Orders a Threat to some Debtors: Good Free Debt Management Advice – Defence Against Unfair Creditors
July 8, 2017
In a recent report, Citizens Advice Bureau (CAB) Chief Executive David Harker said: “The law as it stands at the moment leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors…”
Unsecured Judgment Debt
While acknowledging, that to date, few have lost their homes (there is a second court stage to go through before repossession) Harker’s view was that some creditors were trying to intimidate vulnerable judgment debtors into paying more than they could afford.
A Charging Order is a way of enforcing a previously unsecured debt by securing it against a debtor’s property. The charge will be the amount that is owed by the debtor.
Since 2000 there has been a colossal 722% rise in the number of Charging Order applications by unsecured creditors (CAB 25/6/2009).
Office of Fair Trading
The Office of Fair Trading (OFT), the UK’s consumer and competition authority, is currently carrying out a wide-ranging review into the use of Charging Orders as a method of enforcing judgment debts.
In a update the OFT said: “The interim results of this review indicate that there may be potential problems with the way in which some creditors use Charging Orders as part of their debt enforcement activities.”
While Citizens Advice welcome the OFT review they have challenged the Ministry of Justice to re-examine current legislation and limit access to Charging Orders when debtors are already striving to repay outstanding amounts.
Debt Management Plan
Of course a structured repayments regime lies at the heart of any debt management procedure. A court is always more likely to be more sympathetic towards a debtor’s plight if for example, a well-prepared debt management plan (DMP) is in place.
However there are thousands of organisations offering debt management advice; it is for the unwary and vulnerable a minefield. While many of these companies will offer reasonable advice and will be happy to set up a DMP, they will charge for it. Consequently a sometimes sizable chunk of the amount the debtor is repaying will go to the company and not to their creditors.
So where are the places to go for free and independent debt advice? The Citizens Advice Bureau, which can be found throughout the UK, might well be the starting point for those seeking debt help. They offer a range of services including:
Debt Management Plans
Individual Voluntary Arrangements (IVAs)
These other organisations listed below can also help those looking for free and independent budgeting or financial planning advice.
Consumer Credit Counseling Service (CCCS)
The information in this short article is not exhaustive and does not constitute financial advice.