Credit Card Debt leads to Repossession

Missing payment to your credit card debts may not worry you, even if you have letters from your creditors which are demanding payment; the fear of repossession could be the furthest thing from your mind as the debt is not secured on your house – But Newcastle Building Society have released figures which show 28% of all its repossessions have been triggered by second charge lenders.

Many people think that as long as they make payment to their priority debts, such as mortgage or utility bills, that they are free of the risk of repossession. But according to an article by This Is Money, an incresing number of lenders are using little-know law to convert unsecured debts into a debt which is secured against your home. This means homeowners could potentially be facing repossession, even if they have not missed one payment to their mortgage, which is why it is important that you get expert debt advice if you are struggling with your credit card debt.

The Financial Services Authority have issued a warning to all mortgage lenders who are too quick to trigger the repossession process, and there is now Government repossession help in the form of a new £1 billion scheme which aims to give mortgage help to those who are struggling due to a temporary loss of income.

If you have taken out a debt consolidation loan then you should check whether or not it is secured against your home. A majority of debt consolidation loans secure the debt onto your home, but there are also unsecured debt consolidation loans. If you are unsure then check with your lender.

However it is not just a debt consolidation loan which means that your original credit card debt could lead to repossession. Your lender could apply to the courts for a charging order to placed on your home, which turns the debts into secured loans. This means that the debt is logged at the Land Registry against your property as a ‘second charge’, meaning that if your home is repossessed then they are in the second in line to be paid after your mortgage lender.

If you do receive a notice of a charging order, order of sale or possession order, we can offer you advice about your credit card debt, and may be able to offer you a debt solution to help. Such as:

Debt Management Plan: This will consolidate your debts into a lower monthly payment without the need to take out a debt consolidation loan, which could secure the debts against your home. You make one reduced payment to cover your unsecured debts and we will deal with your creditors on your behalf as part of your  Debt Management Plan.

IVA: Like a debt management plan, you make a reduced payment to your creditors. However, an IVA is a legally binding contract and allows a certain amount of debt write off. On completion of your IVA any unpaid debt will be written off. Each case is different and not everyone is eligible, so please call our IVA advisors today for IVA information.

Repossession Service: If you have been threatened with repossession, it is not too late to take action! wehave a dedicated Repossession Service which could help get your repossession stopped. For further information about what we could do to help, please call us free repossession advice.