Repossessions relating to credit card debt could increase
There are concerns that the number of repossessions in the UK that stem from credit card debt rather than secured debt may start to increase, which means that many people that may have kept on top of their mortgage repayments and other secured debts could still end up losing their home because of other debts that they have defaulted in even if the debt was not a secured one such as credit cards. This is due to proposals that are set to go into consultation over the coming weeks.
Over the past couple of years, where finances have been tight for many, homeowners have been under the impression that the vital thing that they had to do was ensure that they were paying their mortgage and secured debts before worrying about unsecured debt, as otherwise they could lose their homes. However, a recent report has shown that some may end up losing their homes anyway for failing to keep on top of repayments on credit cards.
Up until now lenders have not been able to repossess a home for failure to pay on an unsecured debt, as the Ministry of Justice said earlier this year that it would be postponing introducing a new law that would allow lenders to do this. However, it has now stated that the issue is to be open to consultation within the industry starting from next month. The consultation period is set to last for six weeks.
There are worries that giving the green light to lenders to take repossession action for unpaid unsecured debts could lead to unscrupulous lenders taking action for quite small debts on which the borrower has defaulted, and could counteract the effects of any measures that the government has taken in order to try and reduce the number of repossessions.
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