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Unsecured Debt Converted To Secured Debt


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I am deeply concerned and aggrieved by the fact the government has given the go-ahead to banks and aggressive firms who buy up unsecured debts (for a fraction of their original value), to allow the courts to convert these debts into secured debts with interest, on home owners, placing family homes at risk of repossession. This is grossly unjust and in clear breach of the original contract entered into by both parties.


What is the point of weighing up the risks of your borrowing and deciding to pay a much higher interest rate in order to protect your home only to discover many years later that the government / courts will allow them to convert this into secured debt, which has cost people their homes.


Usually when there is a change in the rules or new laws they only effect what happens in the future and not years in the past, it has been suggested on this forum that we should lobby this grossly unfair action. The lenders have priced into their lending the cost of loans that default, they cannot have it both ways, and if a debt collection firm has purchased a debt at a fraction of it original value, then the government should not allow them to profit from the victims of this banking fiasco, when banks themselves are being saved from going under.


This is exceptionally hard to understand and accept, in light of the governments recent promises to help protect home owners stay in their homes, and when the government is bailing out banks, with tax payers money, for what is now widely accepted as being a culture of reckless and irresponsible lending, which has led to this recession,


The real victims are undoubtedly those who through no fault of their own are unable to repay these debts, yet no one is bailing them out, in fact, the tax payer is burdened further by having to fund legal aid to defend these unfair claims, and the cost of re-housing.




I was pursuing a clinical negligence claim, not for financial gain, but to find out what was wrong with me and to obtain appropriate treatment. This was because the NHS had closed ranks in an effort to cover up for a very serious medical blunder that has left me severely disabled. My claim was funded for the first three years by legal aid to the tune of £10,000, however, due to, ongoing cover-up and professional solidarity; I was unable to secure medical evidence within the UK to support my claim. I was advised to look outside the UK for medical evidence and continue the claim with private funds, which we did with help from family, however, cost escalated, and we were being offered unsecured loans and credit cards on a daily basis. All lenders were advised we were living on disability and mean tested benefits, and they were all very happy to lend us large sums of money, which went into the hands of the solicitors who were advising us; in the end we were robbing Peter to pay Paul with monthly repayments of £2000, from £1400 monthly benefits for a family of four.


My claim was struck out because my solicitor failed to make an application to the court to admit my medical evidence (confirmed by a professional negligence barrister) an obvious conflict of interests, there was no way I could afford to sue him because we were facing debts from the clinical negligence claim in the region of £150,000.


The CAB helped us and got the vast majority of our creditors to accept a £1 monthly token payment, however, one bank, Alliance & Leicester rushed a claim through the court and obtained a judgement in default; they rejected our monthly offer and were granted an interim charging order.


The CAB arranged an urgent referral under legal aid as our family home was at risk, we were appointed a solicitor and barrister. At the hearing my barrister argued the judge had to take our personal circumstances into account, that the other creditors had not been informed, that if the charging order was allowed it would upset existing arrangement and other creditors would follow on, the judge said he felt this was a clear case of irresponsible lending and urged a complaint to the Financial Ombudsman, he advised we should have full public funding.


A very full and detailed complaint was submitted to the Financial Ombudsman which they initially accepted; they then sat on this for some time causing further adjournments and costs, they then rejected the complaint claiming once court proceeding had been started they could not get involved, my barrister contacted them and said the judge had urged this complaint to them because it is for them to investigate and regulate the industry, again we had to re-submit a bulky complaint, which they accepted in writing, however, after sitting on the complaint again and causing more adjournments and costs they rejected it and said if the court feels it is irresponsible lending then they have the power to act accordingly, my solicitor advised we cannot force them to investigate the complaint, also that because of the delays the £10,000 legal aid (for a £13,000 debt !) had been used up and we would have to represent ourselves at the final charging hearing.


I protested we were awarded legal aid for legal representation at the hearing and not for a complaint to the FO that was not investigated, he agreed to get us another £1000 from legal aid for the final hearing, however, he only booked a five minute hearing with a different judge, who was not interested in addressing the previous judges comments on irresponsible lending, he said a decision to allow a final charging order would not upset existing arrangements as all creditors had been notified long ago and none had lodged an interest, the final order was granted.


The CAB Advisor said an order for sale would not happen in our case and to drop off paying the £1 token payments as you will never get past the 6 year rule. We continued to pay the £1 token payment to these who pressed us, some just faded away, they all went through several debt collecting agencies and in-house solicitors all making threats of legal action without further notice, we were advised to ignore them unless they were headed “Letter before Action”


In November 2008 we wrote to the creditors who were hounding us, asking them in view of our circumstances to write the debt off, we wrote to Monument, no reply, we wrote to Cabot UK in relation to a Citi Financial credit card, they replied requesting medical evidence, this was sent in December 2008, that’s the last we heard from them until we returned from a visiting family to find 2 letters dated 29th April from Morgan Solicitors acting for Cabot UK, in relation to two credit cards, one with Cahoot and Monument, I ignored these as they were not headed “Letter before Action”


We then received a claim from the Northampton County Court for a total of £19,399 which includes £400 in costs and a lot of added interest to the original debts to Monument, Citi and Cahoot. We have had no communication from Cahoot in three years, they did not reply to the offer of the token payment, I also understood they were considering classifying the Citi debt as unrecoverable; we certainly did not receive any letter from them threatening court action, and there was no reply to request to write off the Monument debt.



It looks as though Cabot who claims to have bought these debts is copying what Alliance & Leicester did back in 2006 and they also want a final charging order. I have another thread that is dealing with this and I am getting some very useful advice.


Thanks for reading


I would love to hear from anyone else who feels strongly about unsecured debt being secured on peoples homes or if they have had any experience of this.


Kind regards



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you have certainley been put through the mill bernie and you are right ,i think it is time that the case for the goverment allowing the transfer of unsecured to become secured sounds like and looks like a conflict of interests as the goverment are now major shareholders and are looking at ways to make sure they get money whichever way they can,so i for one would sign any partition on this basis

good luck in your fight mate also isnt their something about all this being detremental to your health and mental state,you also should direct some of you story to liberty and to try use the dissability act and other means,but i am sure their is something under the mental health act where they cannot prosecute you if its proved to be the case where your mental health is seriously at stake,possibly why you where asked for doctors certificate and if they found no mental health issue then they know they can have a go


good luck






Advice & opinions given by patrickq1 are personal, are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional

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horror story BERNIE, i hope u resolve ur issues soon.

i fully agree on the securing argument...its a disgraceful loophole, worse in the current environment as you rightly point out.

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I echo R&Bs comments...In My situation, Phoenix Recoveries, a company outside the UK are attemping to secure Charging Orders through debts they have bought and are getting British DCAs to get them through Northampon CCBC before you can blink!!


Definitely needs watching!



They say money talks......mine just keeps saying "Goodbye"

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I believe the EU is looking to enforce unsecured lending to carry the same warning as secured... i.e. your house and property may be at risk if you cant keep up repayments...


A bit blinking late :-(



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IMPORTANT: Please take my advice in the spirit it is given and on the basis that I am expressing my opinion, These opinions are not endorsed by CAG in anyway and are offered informally without prejudice or warranty of any kind. These opinions are solely based upon the knowledge I've gained from this fantastic site and life in general. I have NO legal training.

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I have felt for somew time now that the government knew banks were on the brink of going under and they would have to bail them out, as they have done, therefore, it was in their own interests to change a law on unsecured debt and then back date it to get as much money as they can secured, courts are guided by government, and the Financial Ombudsman would not investigate my complaint of irrisponsible lending, they were passing the buck back and forth. I have complained about my clinical negligence claim, which was a complete cover-up, to Tony Blair, MP's, Ministers, Liberty, the list is endless, it all fell on deaf ears (I am up against the system). Bernie

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I think you should look at the OFT's website (sory don't have the link) but the OFT is investigating the use of charging orders to trun unsecured debt into secured. They must have official backing on this and they moved on the use of SDs. Take a look there is an email link to an official where you can complain.


There is also growing evidence that Cabot is getting desperate and trying to revive old cases, claim SB debts and al sorts of seriously dodgy stuff. I think Cabot is at the root of your problem. Go on the attack.

Edited by Rhia
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