Banks seize homes over credit card debt
Imagine losing your home over a $1500 credit card debt. Crazy, right?
After all, credit card debt is typically unsecured debt, meaning that it’s not collateralized by a lien on your assets (or in English: the bank has no right to take any of your stuff if you can’t pay your credit card bill). This is in stark contrast to secured debt like a mortgage or a car loan, where the lender generally has the legal right to take your house or car if you’ve fallen behind on repayments.
Well, it appears that ‘unsecured debt’ doesn’t mean the same thing as it used to, as banks in the UK have found a legal loophole to sieze the homes of customers who can’t pay their credit card bils. According to the Sunday Times of London, folks owing as little as $1,500 have been served with charging orders, which enable a creditor to order the sale of a property.
What’s even scarier is that this is hardly an uncommon occurance – apparently, roughly 100,000 charging orders were granted by courts in England and Wales last year, which is a 1000% increase since 2000.
In my opinion, this is absolutely outrageous. It’s theft, plain and simple. Let’s hope that loophole gets closed quickly, and that U.S banks don’t suddenly try to pull the same crap.
We’ll keep you posted as this story progresses.
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- What the Banks are Doing With Our Money…
WOW, that is some scary stuff; this that MANY Americans do not want to hear.
Jesse W.
http://www.subprimeblogger.com
Wow,
The banks are getting pretty nervous about recovering as much money as possible these days.
Jesse – you’re not kidding! I wouldn’t put it past the banks to try it, either.
Barry – they are, and with good reason: they made a bunch of stupid loans in the first place and are now trying to make the rest of us foot the bill.
Interesting article, Jonathan, but I don’t see this as anything new or particularly troubling. It’s not really a loophole, and it doesn’t change the nature of secured debt. As I understand it, a creditor can usually only get a charging order after judgment has been obtained. The people being hit with charging orders aren’t just people with credit card balances, they’ve defaulted and had a judgment entered against them. Keep in mind as well that a charging order doesn’t necessarily mean that a house will be sold, it just means that the creditor has that remedy available.
The banks are just looking out for their interests and making sure they can get at least a portion of what they’re owed. That’s not theft- it’s business.