Is all debt secured?

[ordinary_world]

Hi all,
I ask the above question because after browsing numerous debt forums and hearing about creditors 'actioning holding charges' and 'petitioning for bankruptcy' due to people not meeting their contractual requirements for unsecured debt.

Although these are probably extreme actions, it does imply (to me at least) that all debt is secured.

Any thoughts on this?

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[Adam Davies]

Hi
All unsecured debt is just that"unsecured" until a creditor takes a charging order against your property via the courts.If you do not own any property then the debt can never be secured.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[go_4_broke]

Hi OW

As Andy says secured debt is of course only debt which is legally related to an underlying asset such as a house.

However many debt situations, most notably bankruptcy, involve realising an asset to offset unsecured debts either voluntarily or by force.

Therefore it could be regarded that all debts are 'secured' in an indirect sense, to whatever assets there may be.

This is why once you own property your credit rating goes through the roof.

Thats how I see it anyway. It's an interesting point.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[Adam Davies]

G4B
That is a very good point and one that I,d never thought of.You are right in that once a property owner you are a much more attractive proposition for lenders for the reasons that you give,ultimately all loans are secured.If you are not a property owner then the risk factor must rocket[in the eyes of the lender]
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[gimmewine]

I have thought of it a great many times in the last 2 years. I have a great deal of equity in my property so I cannot access an iva or go bankrupt, yet I cannot borrow against that equity as I am at my limit of 4x salary. My kids would hate to move, so thank god for family and friends, don't know what I'd do without them.

[MelanieGiles]

To gimmewine

Most mortgages these days do not rely on earnings multiples, and so long as you can afford the repayments you can apply for a mortgage on a "self-certified" basis - ie you certify that you can afford the repayments. Mortgage borrowings are the cheapest form of credit, so it makes sense to consolidate in this manner so long as you are disciplined and cut up the credit cards so they cannot be used again. Why not get a quote from a broker just to see what is possible.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[gimmewine]

Lol, I never knew that, useful to know. I cut up all the credit cards when I remortgaged last time and am now paying only the mortgage and whatever I can afford to the said family and friends. They are more flexible, they allow payment holidays for xmas but when I come to remortgage in November, I will have a look at that coz I would feel better if I could repay them earlier. My earning have gone up anyway so I can already remortgage 6 out of the 7k I owe them, by November I will have had another pay rise, so it should be ok.

[ordinary_world]

Some very useful comments - many thanks. So if you have any realisable assets then they will always be at risk either directly or indirectly.

Could anybody clarify what is meant by a holding charge? What process does a company have to go through to obtain a successful holding charge? For example, let's say I'm applying for an IVA, I default on all payments whilst setting up the IVA and an impatient creditor decides to put a holding charge on my property - what would happen in the event my IVA app was successful and conversely if my app was unsuccessful?

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[Storm]

It is an order of the court placing a 'charge' on the judgment debtor's property, such as a house or a piece of land. The charge will be the amount owed.

If the judgment debtor owns stocks or shares or has a fund or money in court, the court can also put a charge on these in much the same way as on property.

To obtain an order - a creditor needs to:

1. Default your account
2. Obtain judgement (although the Civil Procedure Rules do allow for creditor to apply for an order without judgement in extreme circumstances)
3. Apply for an Interim Charging Order - normally granted as you have no right to appear and notice place on land registry.
4. 30 days later hearing is held to make order

You can resist a charging order in a couple of ways:

1. Pay the debt owed
2. When the judgement order is made use form N9 to make an offer of payments to the creditor.
3. If judgement has already been given you can apply to the court for them to order the creditor to accept a payment offer (providing it is reasonable this will be ordered)

Once a payment order has been made providing you keep up the payments as per the order a creditor will not be granted a charging order by a judge. (There is good case law on this one)

Typical time frame is 90 days - ie Default notice, CCJ and interim order can be done in 60 days with a further 28 days for hearing and Final Order.

In summary whilst these orders are generally being abused by creditors looking to turn unsecured debts to secured debts they can be resisted with a little bit of know how.

Your IP can also apply for a order to protect you from your creditors whilst the IVA is being proposed.


For those of you effected by charging orders there are two test cases going through the courts at the moment both involve GE Money.

The first case relates to interest charges applied by GE as an unsecured debt which they later sought and obtained a charging order therefor making it secured. GE offered the debtor the options of both secured and unsecured facilities with different interest rates. GE are being pressed to explain whether they in fact did use the fact the debtor was a homeowner to mitigate the risk.

The second case again with GE relates to the wording of the charging order and whether a joint (non debtor) has the right to sell the property irrespective of the order.

[ordinary_world]

Superb - thanks Storm, I'll know what to expect and do now!

I gather it costs creditors to go through this process and hopefully acts as some deterrent. Mind you, we owe quite a lot so perhaps not!

Do you know which creditors are 'trigger happy' and who frequently seek charging orders? (always good to know so I could ask my IP for protection against such impatient creditors)

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[MelanieGiles]

Hi Ordinary World

I am seeing more charging orders these days, but they are generally only made when creditors have undergone a lot of collection activity against an account without success. If you are relatively up to date with your payments, and are taking steps to resolve your financial difficultes, then the risk from such action is slight.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

OW,

If you want to know the sort of creditors most likely to get involved with this type of thing look no further than Storms' comments above.

GE money are not exactly a sub-prime lender but I would certainly put them into '2nd tier' after the main high street banks and credit cards. We are talking car loans, loans for double glazing, that type of thing.

They are also I believe US in origin and the US based outfits tend to be more aggressive anyway, both in lending and recovery.

I think Storms timetable while theoretically possible would assume a highly aggressive lender and a fully non-compliant debtor; as to what happens more usually I would be guided by Melanies comments above.

Once a charging order has been effected the debt is secured and cannot be avoided in bankruptcy. The debtors best defence apart from legal manoeuvering is to make sure the chargeable asset is as worthless as possible.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[ordinary_world]

Hi Melanie,
Thanks for the info and providing some reassurance. Yes, we have somehow managed to remain up to date with our payments (this month being the first time we will default...so have been feeling slightly nervous each time the phone rings or the postman comes).

We notified most creditors for the first time this month that we are in difficulty and actively taking steps to resolve the situation. 'Letters of Authority' will also be going out later today to all creditors..so hopefully they wont feel a need to rush in with big threats or the heavies! [:)]

Best

OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[ordinary_world]

Hi G4B,
I've never heard of GE money before, although I've definately heard that American outfits like MBNA are (or can be) be very agressive. I understand that members of the Consumer Action Group are even petitioning FOA against MBNA due to their aggressive tactics. Also, in one case, I read that MBNA were threatening to apply american law in the UK which sounds preposterous! [:u]

My partner has a card with A&L/MBNA so I've been watching forums to see how best to deal with them.

Yes, Melanie's advice is very reassuring and overall it sounds as though holding charges are only applied when two extremes come together.


Best



OW

- 'I wont cry for yesterday 'cause there's an ordinary world somehow I have to find...'

[lesley]

GE money were one of my storecards if that helps.