Thread: Is an Unsecured loan just a more expensive Secured Loan?

Hello all,


From reading these forums, which are fantastic, i am saddened to find out that even an unsecured loan can be turned into a charging order, forced property sale or even a BR petition.

Am I missing something here? I take out an Unsecured loan, 4 maybe 5 times the interest of a secured loan, and when I run into trouble they can basically end up taking my house anyway? What is the real benefit of an unsecured loan? I ask because MBNA are threatening me with BR.

thanks.

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Originally Posted by mrdonk

Hello all,


From reading these forums, which are fantastic, i am saddened to find out that even an unsecured loan can be turned into a charging order, forced property sale or even a BR petition.

Am I missing something here? I take out an Unsecured loan, 4 maybe 5 times the interest of a secured loan, and when I run into trouble they can basically end up taking my house anyway? What is the real benefit of an unsecured loan? I ask because MBNA are threatening me with BR.

thanks.

You are abosultely 100% correct, I have been thinking this for some time.

Essentially they can charge you anything for an unsecured loan and when you default then go for a charge on your property. They first check out that you have a property and it is commercially viable (i.e. debt is a few grand or more) then hey presto you are paying unsecured interest rates on a secured asset. Great!

So its no real risk for a bank giving you an unsecured loan if you have property with equity since they will never ever lose!

Well spotted

when you default then go for a charge on your property

It isn't quite as straightforward as this - the creditor first has to issue a county coi8rt claim against you which you get the option to respond to either admitting or defending all or part of the claim. If you admit the claim & make an offer of payment which the creditor refuses then it's up to the court decide what is reasonable for you to pay.

As long as you pay on a CCJ and don't default on the CCJ the creditor can't go for further enforcement eg a charging order. It's only when you default they can do this and even then there is a hearing before a final charge is made so you can argue against it.

Also, a creditor with a charging order is not actually in the same legal position as a secured lender. A secured lender can apply via the county court to repossess the property once you are 2 months in arrears. A creditor with a charge against the property can only apply to the court for an order for sale and it is extremely rare that this would be granted for what was effectively an unsecured debt in the first place.

So yes, charging orders are becoming more common but the overall situation is a bit more complex than that...

So a bit of legal process but it is happening more and more. Sadly..

Yes they are more common but it still doesn't usually result in someone losing their home

Originally Posted by powelll

Yes they are more common but it still doesn't usually result in someone losing their home

I thought that the payment was only triggered on the sale of the asset?

and here is a real and recent example:

http://www.consumeractiongroup.co.uk...t-my-mind.html

As i understand it, any creditor can apply to courts for an "order to sell" or something like that.


Actually, this has astounded me - I mean secured loans have the standard "YOU HOME IS AT RISK" warning on adverts, applications, etc. but the unsecured loans have none of this.

I'm surprised the media havent picked up on this.

well, as pointed out, there is only the small barrier of the courts but it is not a very strong safeguard. I personally would not get a mortgage until I had no debt otherwise you are in serious risk of being out on the street.

Many people are obviously at their most vulnerable and do not have funds so when presented with the prospect of courts, solicitors and costs simply cave in. Pyschologically they are drained and this is what the banks, credit card companies and DCA's prey on. Many conform, you see the small few here on CAG who take the fight on.....

As i understand it, any creditor can apply to courts for an "order to sell" or something like that.

Think I covered this earlier - a charge is usually just paid when the porperty is sold

A creditor with a charge against the property can only apply to the court for an order for sale and it is extremely rare that this would be granted for what was effectively an unsecured debt in the first place.

and i was merely confirming what you said to the previous poster...

Originally Posted by mrdonk

and i was merely confirming what you said to the previous poster...

Sorry - I really didn't mean to sound snotty I just thought you may have missed it in my post. Some of my posts are v brief and can come accross as rude as I only have internet access at work; no hard feelings

So why oh why do they go for charging orders???