outstanding amount due on an unsecured loan

[martyn.h]

I have an outstanding amount due on an unsecured loan, which now has a CCJ. I have been contacted by the solicitors acting on behalf of the loan company to inform me that the next step they are taking is to appeal to the County Court and attempt to secure a charge on my property for the said amount plus any interest and fees. Firstly can you tell me if this is possible on an unsecured loan and what are my possible options to avoid this. I am in a position to offer the return of the vehicle for which the loan was originally obtained, and it may be possible to offer a small payment although due to current circumstances I am unsure of how much if anything is going to be available. Any advice you can give on this matter would be gratefully appreciated.

[kallis3]

Hi Martyn and welcome.

Your creditor can put a charge on your property, which effectively turns it into a secured loan.

I don't know what options you can take to avoid this, but one of the technical experts will be along to advise you shortly.

[Viki.W]

Hey martyn, welcome to the forum. As Jan has said, it is possible for the company to do this. Do you have any other debts at all?

[MelanieGiles]

Is this your only debt Martyn? If so, then it may be sensible to return the vehicle and come to an arrangement to repay the balance, however if you have a number of creditors then you have to be careful not to just prefer this one. A charging order is effectively a way of allowing a creditor to get security for their debt, and when this is granted the creditor will still expect you to pay by instalments.

[facingittogether]

martyn

egg credit card took us to court to put a charging order on our house, luckily before the case was heard our iva was approved and therefore overided it but it can be done!

like vicki says have you any other debts? if you post your details perhaps an expert can advise you further!

barb x

[Storm]

Before thinking of trying to return the vehicle you need to establish if agreement was a personal loan or Hire Purchase agreement.

This is quite important because if it is a HP agreement the lender hasn't followed the due process of seeking a return of goods order followed by subsequent disposal of the asset and mitigation of the lenders losses.

If it was a personal loan you have no right to return the car and to be honest the lender won't want or accept the asset. You could look to dispose of the car and see if the lender will take it in full and final settlement or try to come to a payment agreement ideally with the monies recieved from the vehicle sale be paid to the lender.

[martyn.h]

I am trying to establish whether the original agreement it was HP or loan, I always thought it was HP however I am doubting this now. If the company in question successfully places a charge on my property can they repossess. If the charge is placed what are the other possible consequences.

Should I approach the court regarding this matter or the solicitors representing the company direct? The outstanding debt on the vehicle is approximately £7,400.

The court order is scheduled for mid November 2008. The loan/HP company has never asked for installments or attempted to reclaim the vehicle.

[kallis3]

I doubt they would reposses, but if you tried to sell your house I think it can make it a bit awkward, and any monies owed to that company would be taken out of any equity left after the mortgage had been settled.

Did you take out finance with the car company, or was it something that you sorted out yourself?

You do need to sort out your paperwork if you still have it.

[MelanieGiles]

Do you have other debts Martyn?

[martyn.h]

Yes there are some other smaller debts making a total of approximately £10 - £12K. I will need to gather together all the paperwork and exact figures.

Can you clarify, can a repossession be forced after a charge is added from an unsecured loan?

[MelanieGiles]

Yes - a creditor whose claim is secured by way of a charging order can apply for possession, but they are unlikely to do so if you make a reasonable form of offer. With the other debts that you have, do you feel that you will be able to deal with all of them if you can sort this matter out?

[David Mond]

Seek advice (which is free from an independent IP or DMP business provider) to give you the appropriate advice. See www.iva.com. Good luck

[martyn.h]

I have sought some advice about the proposed charge on the property from an unsecured loan/hire purchase (it looks like this was HP as it was an agreement taken out at a dealership) and as I still posses the vehicle surely the HP is secured on the vehicle first, yet they have made no attempt to repossess or contact me about returning the vehicle. So if the HP is secured on the vehicle why are they trying to obtain a charge on the property?

Thanks for your help.

[kallis3]

Must admit that I thought HP would be secured on the vehicle.

[MelanieGiles]

Don't be misled by the fact that you bought it through a dealership, or that the agreement looks like HP, a lot of these finance agreements are now actually unsecured loans so do check the fine print.