Unsecured Credit - There's no such thing

[hungrybear]

The baseline point stands though, in terms of security to the lender there is no difference - if the borrower is a homeowner - between an unsecured and a secured loan. This is a 'have your cake and eat it' situation for the lender.

 

If the fact you are a homeowner is a factor in granting you credit (and who believes otherwise?), then why aren't you legally entitled to be warned that you could lose your home, or at least have to give up some security in it, as a result of entering into the agreement?

 

There is no argument that justifies omitting the 'Your home is at risk...." warning from supposedly unsecured credit / loans - other than it would adversely affect the business of the lenders. No way I would have taken the credit flung at me had I known the lender could switch to being secured at the drop of a (Judges) hat. I am sure I would not be alone in thinking that.

 

 

agreed, the only way to get 'lots' of unsecured credit at a good rate is to be a homeowner which says they are 'thinking ahead' with a view on the risk

[diddydicky]

The baseline point stands though, in terms of security to the lender there is no difference - if the borrower is a homeowner - between an unsecured and a secured loan. This is a 'have your cake and eat it' situation for the lender.

 

If the fact you are a homeowner is a factor in granting you credit (and who believes otherwise?), then why aren't you legally entitled to be warned that you could lose your home, or at least have to give up some security in it, as a result of entering into the agreement?

 

There is no argument that justifies omitting the 'Your home is at risk...." warning from supposedly unsecured credit / loans - other than it would adversely affect the business of the lenders. No way I would have taken the credit flung at me had I known the lender could switch to being secured at the drop of a (Judges) hat. I am sure I would not be alone in thinking that.

 

the drop of a hat is a simplification of the reality

 

many people who are not homeowners take out credit cards thus a statement within an agreement to the effect that their (non existant) home could be at risk would be incorrect, further if they then later became home owners then the term would be unenforceable as at the time the card was taken out there was no home to be at risk.

 

 

further imagine it was you who an individual was ordered by a court to pay you after a court case and they were able to stick two fingers up and plead poverty or offer you one pound a month whilst sitting on property worth hundreds of thousands of pounds.

 

what you are arguing for goes far beyond the remit of the cca and to the heart of the civil justice system itself

 

there has to be SOME means for the victor in court to get satisfaction

[vinty]

The baseline point stands though, in terms of security to the lender there is no difference - if the borrower is a homeowner - between an unsecured and a secured loan. This is a 'have your cake and eat it' situation for the lender.

 

If the fact you are a homeowner is a factor in granting you credit (and who believes otherwise?), then why aren't you legally entitled to be warned that you could lose your home, or at least have to give up some security in it, as a result of entering into the agreement?

 

There is no argument that justifies omitting the 'Your home is at risk...." warning from supposedly unsecured credit / loans - other than it would adversely affect the business of the lenders. No way I would have taken the credit flung at me had I known the lender could switch to being secured at the drop of a (Judges) hat. I am sure I would not be alone in thinking that.

I agree with you 100 per cent, how can lenders get away with marketing one type of loan as secured and another as 'unsecured' when in fact in the event of default you can end up losing you home with both types of loans,

 

When i took out my mortgage i knew that if i defaulted i could lose my home, i accepted those terms.

 

However when i took out a credit card i took a calculated risk, i believed that the terms and conditions of the loan meant that in the unlikely event of my default there would be penalties applied such as ccjs adverse credit ratings ect. but because i had been led to believe that the loan was 'unsecured' my home would not be at risk it was on this basis that i accepted the card providers offer of credit, had i been aware that my home could taken for defaulting on the credit card i would not have signed the agreement.

 

It isn't about people trying to get out of paying their debts, it is about lenders being transparent, how many people who have credit cards to day would have taken them out if they known their property would be at risk.

Edited December 8, 2009 by vinty

[diddydicky]

i think you might be getting a bit carried away with the argument

 

the number of debtors with credit card ccj's that end up with charging orders is miniscule

 

the ccj gives you an opportunity to pay monthly payment that is within your means and there is NO INTEREST on the ccj- therefore how can you say that you have been disadvantaged- you have in those circumstances reduced a debt on a credit card paying 16-18 20-28% apr down to zero!!

[vinty]

the drop of a hat is a simplification of the reality

 

many people who are not homeowners take out credit cards thus a statement within an agreement to the effect that their (non existant) home could be at risk would be incorrect, further if they then later became home owners then the term would be unenforceable as at the time the card was taken out there was no home to be at risk.

 

 

further imagine it was you who an individual was ordered by a court to pay you after a court case and they were able to stick two fingers up and plead poverty or offer you one pound a month whilst sitting on property worth hundreds of thousands of pounds.

 

what you are arguing for goes far beyond the remit of the cca and to the heart of the civil justice system itself

 

there has to be SOME means for the victor in court to get satisfaction

Lots of people who don't own a home get credit cards, thats the point, the use of the term 'unsecured credit' is misleading. If you enter into a credit agreement and your led to believe by the provider or their agents that the credit being offered is unsecured as opposed to secured.

If you then sign the agreement in the belief that your home is not at risk when in fact it is at risk you are being misled.

 

Why don't lenders outline the steps they will take to recover their money in the event of their customers defaulting, this should include whether they would pursue a charging order or a forced sale of the customers property, home owners should also be given the option of lower interest rates if they agree to a charging order on their property in the event of default this in effect would make their credit card agreement a secured agreement, if they decide not to make their property security, then their interest rates and conditions should be the same as non home owners who apply for credit cards.

 

With in this information in cluded in the terms and conditions of the agreement a prospective customer can make an informed decision as to whether they want to sign.

[dp77]

Here you go.

 

Credit card fuelled repossessions may rise | This is Money

[dp77]

"David Harker, chief executive of Citizens Advice, said: 'The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.'

 

'Charging orders' used to threaten debtors | This is Money

[dp77]

And a bit more

 

"At the same time, banks and building societies are concerned that other non-mortgage loans are triggering too many repossessions.

Newcastle Building Society, for instance, found that a staggering 28% of all its repossessions were triggered by other lenders.

Those in danger include people who took out so-called consolidation loans, rolling all their debts into one secured against their home.

However, most people will not realise that credit card debt and personal loans could also put their home at risk. The lender can apply to the courts to get a charging order placed on your home, which turns the debts into secured loan"

 

28% of repossessions triggered by other lenders! If that isn't an argument for putting the warning about losing your home onto credit agreements I don't know what is. There is no contractual issue, it doesn't matter if you own a home or not when you take out the credit. It's a warning, not a term or condition. All it has to say is something like "If you own a home it may be repossessed if you do not maintain payments" - put that on every credit card / overdraft / loan application.

 

That's what I'm arguing for, not whether the victor in court can nail the loser or not. The issue is that the loser in court had a right to know what he / she stood to lose.

Edited December 8, 2009 by dp77

[diddydicky]

"David Harker, chief executive of Citizens Advice, said: 'The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.'

 

'Charging orders' used to threaten debtors | This is Money

 

 

and presumably you would be happy at paying around 500 or so every time you take out a "secured" credit card just to get a lower rate? for that is at least what it would cost in charges for them to register the charge

 

furthermore- if one of the other mortgagors objects you may be stuffed,

 

so faced with a higher interest rate and easy credit with very little chance of being re possessed, you would chose set up fees for a lower interest rate ! and certain repossession?

 

i really do think some of you guys need to think through your arguments on a wider scale

[vinty]

and presumably you would be happy at paying around 500 or so every time you take out a "secured" credit card just to get a lower rate? for that is at least what it would cost in charges for them to register the charge

 

furthermore- if one of the other mortgagors objects you may be stuffed,

 

so faced with a higher interest rate and easy credit with very little chance of being re possessed, you would chose set up fees for a lower interest rate ! and certain repossession?

 

i really do think some of you guys need to think through your arguments on a wider scale

Only a fool would take out a credit card on those terms, all i am saying is that lenders should be obliged to make potential customers aware that they could lose their home, and that their so called 'unsecured loans' are not actually unsecured.

[jimbo45]

C'mon Peeps

When you sign an agreement ALL the conditions on it should be there.

 

Otherwise as has been stated what does the word "UNSECURED" mean.

 

I know many many people who aren't even now aware that CO's on their property - and even forced sales can be made for really very small amounts of debt -- in one case I think I actually saw a "Re-possession" order for a 1,000 GBP debt.

 

So IMO (although not Law of course) this is EVEN WORSE than the PPI mis-selling as you are mis-led into playing "Casino" with your house when taking out a Credit Card.

 

Of course the number of Credit Cards taken out would be a LOT LESS if people knew that they could potentially lose their homes for small amounts of "Unsecured Debt". Bully for them -- the conditions should be STATED CLEARLY.

 

In any case if this route is to be followed shouldn't there be a certain MINIMUM amount before you could lose a property -- people have suggested 25,000 GBP.

 

Whatever the outcome hiding these sort of "Backdoor" loopholes on a CCA to me is just 100% dis-honest -- and perhaps the Guardian instead of attacking sites like CAG could get this type of stuff re-dressed.

 

The law needs to be fair and equitable to BOTH DEBTORS AND CREDITORS.

 

What makes the whole process so horrendous are usually the convoluted legal processes, and absolutely HORRENDOUS "Collection charges" levied against people who least can afford to pay. People's circumstances do change and eventually if it were tackled humanely and sympathetically a lot of debt COULD be paid back.

 

For example Do the judges who sit in Northampton really believe for one second that most people can comply with the PAY FORTHWITH - FULL AMOUNT XXXXX is due FORTHWITH within yyy days. If people could pay they would (usually) already have done so. They surely can't ALL be living on another planet.

 

Also instead of selling a debt on to a DCA for say 10 pence in the pound - recognize the fact that it might be better to get 35 pence in the pound for instance from the original debtor with a realistic payment proposal ( now that would be a "Listening Bank") without going through all the Court B/S and of course really horrendous publicity.

 

Compassion and Logic in this "Industry" are commodities in Notorious short supply.

 

Keep going CAG as I have a horrendous feeling the Law will tread consumers into the ground even more -- a proposal to extend Bailiff's right of entry for some Civil debt like unpaid Council Tax is still on the table --only postponed not abandoned and the way Bailiff's often treat vulnerable people make some of the scummiest DCA's seem quite benign by comparison.

 

I believe in most of the EU any possible action such as House Re-possesion for unpaid credit card bills have to be stated on the CCA.

 

Of course in the UK we mouth and rant daily at the EU - but on the rare occasions it comes up with something good we just ignore it.

 

In the long run it might be better to outlaw CREDIT CARDS altogether - say phasing out within 4 - 10 years -- after all with DEBIT CARDS etc we don't need to carry around cash which was one of the reasons Credit Cards were invented in the first place.

 

Cheers

jimbo.

Edited December 11, 2009 by jimbo45

[MadScouser]

Given the difference in interest rate between secured and unsecured credit, would you be at liberty to claim a refund on unsecured credit, if a creditor tried to implement a charging order? If this is the case this would clear most, if not all the debt?

[jimbo45]

Given the difference in interest rate between secured and unsecured credit, would you be at liberty to claim a refund on unsecured credit, if a creditor tried to implement a charging order? If this is the case this would clear most, if not all the debt?

 

 

Hi there

There's more chance of Hell Freezing over or of Staines Town FC winning the European Champions League than of being able to get a "Refund".

 

Cheers

jimbo.

[MadScouser]

Why should you not be able to claim a refund, through the courts. You have been paying at 19%, where as a secured loan is only 5%(examples not accurate figures), therefore you should be entitled to the 11%difference if the creditor wants to turn the loan into a secured one.

[RoadToRecovery]

If we lived in a democracy, which sadly we don't. There should be no such thing as a charging order for unsecured debt.

 

Using the word 'debt' in the loosest sense of the word as the actual debt is created from nada by the banks.

 

The greatest trick the devil ever played was to masqerade as a bank!