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can an unsecured debt be made to secured sorry confused

(32 Posts)
whichwitchisthis Fri 06-Nov-09 19:39:06

due to hard times at the mo we are doing a debt management plan with payplan

years ago we got a loan through Weatherseal for 4 windows for £2500 we have been paying this for 5 years (/) and have actually paid for the windows but are now paying the interest (this is fine) the offer payplan has given them is £14 a month for 10 years this has been worked out on our income and expenditure

we have had a call today from a debt collection agency saying that if we do not pay the full outstanding amount (£2400) they will take us to court and have it secured on our house......we can not afford to do this obv

Can they do this I thought it was an unsecured debt because it was not secured on the house.....surely they cannot then get the court to secure it upon the house and what would this mean

Thanks in advance sad

HeSaysSheSays Fri 06-Nov-09 19:44:20

If you have a plan in place then they are obliged to deal with payplan and not you - as I understand it they are not even allowed to call you once you have something set up.

Attaching to your I am pretty certain they cannot, they can go and ask for an attachement to earnings where it will be taken from your wages by your employer and paid direct but I don't think they can attach to your house.

Call payplan first thing on Monday and explain what has happened and ask their advice. I suspect they will contact the debt company themselves and get them to behave properly. Make sure you record as much info about the call as you can - you may be asked to put in a complaint about the ompany, bullying tactics are a serious no-no and the company could get into a lot of trouble over it!

whichwitchisthis Fri 06-Nov-09 19:49:56

thanks for the fast reply

We do have a plan in place for a lot of places but GE money have not agreed and will not agree to they are sending us papers which we must fill in in 14 days and then they are taking us to court and then all that with securing the debt to the house will a ccj but not iykwim

I'm going to try Payplan tomorrow morning they are closed now, but she said to dh that we shouldn't take advice from a debt management company and should be speaking to a solicitor...I am hoping that this was just a scare tactic to make dh suddenly magically find £2500 from somewhere! sad

whichwitchisthis Fri 06-Nov-09 19:51:31

sorry I don't think I was overly clear in my first panicked post grin

Payplan are dealing with all our debt and they have done an income and expenditure and worked out what we can afford to pay everyone...everyone else has agreed to this bar GE Money...even Tescos who we owe a substantial amount to have agreed it!

HeSaysSheSays Fri 06-Nov-09 20:00:43

Have you stuck to your previous payment plans with them?

I find it a very odd way to proceed TBH, if they do attach (or put a charge) on your house they won't get any money until you sell the house...which could be never - and any mortgage will be paid off first. For such a small amount of money it seems a very odd way to go on.

However you are right about scare tactics, they will do a lot of things to try to scare money out of you - not because they are allowed to but because it works, sadly.

The forms will basically be the same as the ones you filled in to set up your plan in the first place so should be quite easy to do. There are standard allowences that are made for certain things, they will want to check that you are not allowing too much expenditure etc. There are allowences for everything you can imagine, including toilitries, food, telephone etc etc. Just complete the forms the same as you did for your plan, put in your offer and see what happens I suppose.

You could go to a solicitor but I am not sure you would get any help with the costs, there are helplines for free legal advice in relation to debt, perhaps they will be able to offer some help?

whichwitchisthis Fri 06-Nov-09 20:04:20

thanks smile

yeah we made the £50 payments for years and then when we started the debt management plan they got sent the authority to act on our behalf and the offer which they declined, but we made every payment of the £14 we could do

It just seems so stupid I can see why they would do it for a larger amount....Oh well hey ho not much we can do about it unless we win the lottery on Saturday grin

ABetaDad Fri 06-Nov-09 20:07:07

Yes. Unsecured debt can be made secured if a borrower applies to the courts but the circumstances you are in are not clear enough to know if that can be done with your debts.

whichwitchisthis Fri 06-Nov-09 20:12:17

what would you need to know to clarify it?

HeSaysSheSays Fri 06-Nov-09 20:18:27

Well, if you have made all the payments in the original agreement until you went to the debt company and then made the payments from then onwards it is even more odd, a court will look at your willingness to pay as well as your ability to pay. IMPO (personal opinion) you have made it very clear you are willing to pay and you have been paying for a long time so they cannot doubt your abilty when you took the loan out (ie you were not planning on getting finance and then not paying it off).

It seems very odd to me, I wonder if they are blustering to try and get a better offer out of you - but obviously cannot be sure so don't count on that!

Do you think you could get an appointment with CAB? They may be able to help?

whichwitchisthis Fri 06-Nov-09 20:23:59

hhmm I might try and ring them too ...not too sure where they are around here though

TigerLightsitandscarpers Fri 06-Nov-09 20:26:49

If you have an unpaid debt, ultimately a creditor can get a charging order securing it on your house. I can't remember the rules about this, but you can google "Charging order" and find out. There might be a minimum limit. They have to prove the debt first and also get a court order to get the charging order (from memory).

HeSaysSheSays Fri 06-Nov-09 20:26:54

they have information online, you should be able to find out which branch is nearest to you from there.

ABetaDad Fri 06-Nov-09 20:36:13

whichwitchisthis - I really think you need to take all the documents to CAB and ask them. The details are very important. I don't want to say anything that is wrong.

I do know for sure that unsecured debt can become secured though but oly via the courts. The charity I work for does loans and we do occasisonally secure debts on property if people refuse to pay us back the money.

Aussieng Sat 07-Nov-09 00:23:06

If you go to CAB ask to speak to one of their trained Money/Debt Advisors not just the general CAB bods. You need specialist help. It is possible that the creditor company is in breach of OFT guidelines on debt collection too. Try the consumer action group for more advice - the debt action pages are very useful and there are lots of very responsive, helpful and knowledgable people on there (as well as MN too of course).

DippyFarquhar Sat 07-Nov-09 00:49:31

Just read this off the National Debtline website

In order to obtain a charging order they have to have already taken you to court for the outstanding debt and, if you default on the payments the court ordered you to make, then they can apply for a charging order.

So if they haven't already taken you to court, or they have and you've been making the payments, they're unlikely to get a charging order.

Speak to National Debtline (lots of info on their website) or CAB. They are really helpful.

DippyFarquhar Sat 07-Nov-09 01:00:20

Also from that page (I've cut and pasted what seems to be relevant to you):-

These are some of the factors that the court may consider.

#If you have a number of debts and making a charging order in favour of one creditor would give them unfair priority over the other unsecured creditors. It is particularly useful if you can show you already have a payment arrangement in place with your other creditors. This would be upset by an order being made. Point out if any of the debts are larger than this debt and if any other creditors have frozen the interest.

# Could the creditor have given you a secured loan when you first took out the loan? If they decided to offer an unsecured loan instead, this could be particularly relevant if you have other unsecured creditors who may be disadvantaged by a charging order being made.

# There are other ways the court could enforce payment of the debt. You could ask the court to make an instalment order so you make monthly payments you can afford, or an attachment of earnings order so that the instalments would come directly from your wages. This is only useful if you are employed and your employment would not be at risk.

Also, as another poster said, even in the unlikely event of them managing to get a charging order, they would most likely have to wait for you to sell before they got their money. Much better for them to settle for a smaller regular payment until your finances improve.

You don't need a solicitor, they are using scare tactics. Ring NationalDebtline 0808 808 4000 for advice.

whichwitchisthis Sat 07-Nov-09 08:28:38

thanks DippyFarquhar no they haven't already taken us to court over the debt, and we havea fair few creditors already whom we owe more to so hopefully they won't get the charging order

everyone else has agreed to the payment plan that is in place and we have never defaulted on this, and never defaulted on the previous agreement with them. We thought we were doing the responsible thing in trying to set up a payment plan before we started to default on stuff, and decided against going bankrupt as it could cost us the house .... but if they did manage to secure the debt on the house dh is now saying we may aswell consider going bankrupt

We have no equity at all in the house either, if we had we would have remortgaged to pay the debts off! grin

thanks I'm going to ring the National debt line now

Thanks again everyone smile

ABetaDad Sat 07-Nov-09 08:38:31

whichwitchisthis - I hesitated to suggest it last night but given your situation your DH is right.

There is less stigma with bankruptcy now but working with a lot of people in deep debt the mental distress it causes and the years it takes to work through an agreement of the type you are in usually defeats most people no matter how committed and honest they are. The fees and charges just mean people can never work their way out of it and then they default when another glitch like a job loss or arrival of a child puts ther finances under more pressure again.

If you really have debts greater than the value of your assets and the debts are so large you can not realistically repay I would say bankruptcy is your only solution. It costs money to do it though and it has some penaltes attached such as damaging your credit recods for several years but frankly in the current environement most banks are not lendng to people with damaged credit records like yours so you will not be able to get credit anyway so that is no loss. At least you can start again.

You may find CAB are better help with deciding to go bankrupt than the National Debtline.

HeSaysSheSays Sat 07-Nov-09 12:27:27

I have to say, the choice is yours however, you have a debt payment plan in place with payments you are able to make and stick to. Just one of your debts is being difficult and that is for the sum of £2500.

My personal opinion is that it would be foolsh to go bankrupt over this - at least at this stage. Loosing your house for £2500 is not really a sensible solution. Like I said, having them put a charge on your house just means that the debt will be paid when you sell the house - after your mortgage has been paid so, whilst it sounds scary, in practical terms it is not that terrible. You can save money up to pay it back and have the charge removed at a later date.

I really would get some proper advice about what this would actually mean - and whether thay can even take that step, by the sounds of it they cannot.

Added to that you have the fact that a court will look on your efforts so far as being good, you have behaved responsibly throughout this so it is quite possible the court will actually side with you and tell the company to accept your offer.

ABetaDad Sat 07-Nov-09 12:36:48

What HeSaysSheSays says is true and the creditor has to apply to the court and get an County Court Judgement against you first and then you have to have failed to pay that and then they have to go back for a Charging Order. They cannot generally force you to sell but there are some extreme circumstances where that can happen.

This is complex and the position you are in with your other creditrs, whether you would be better off going to a bankruptcy and starting afresh or whether you have a decent prospect of paying your debts off are things that need to be carefully considered and you do need someone neutral like the CAB to work through the options with you.

As I said much earlier the particular circumstances of your current agreements, whether you have honoured the fully, the size of the debts, whether they are priority debts, the attitude of the other creditors, your future job prospects, family circumstances all make a difference to the route you can take.

3girlsunder3 Sat 07-Nov-09 12:54:53

Hi whichwitch
So sorry to hear you are having these problems. Just to try to reassure you - as Dippy says in order to get a charging order they must 1st take you to court & win, obtain a CCJ against you & repayments are then set by the courts, therefore are set at an affordable level. If & only if the repayments are defaulted on then they can go back to court again & as a last resort can apply for a charging order. HOWEVER - even in the worse case scenario if a charging order were to be granted against you it is a 2nd charge against the property which just means that upon sale of the house they get their cut - they cannot influence or force sale of the house - it is not like a mortgage - so they could wait 50 years for their money if the house was not sold.
It is very very unlikely that they would go to the expense of doing this & I suspect they are just using intimidation & bullying tactics to try & get their money - debt collectors are effectively on commission. They can be reported for doing this.
Please try not to worry.

3girlsunder3 Sat 07-Nov-09 13:25:35

Apologies for cross posting - I typed this last night but forgot to send it...

3girlsunder3 Sat 07-Nov-09 13:41:18

Just to add further to whats been said - please get some independent advice on your situation. Payplan are not impartial obviously, since they take a fee. Bankruptcy would definitely not mean losing your house as it is your family home - this is only sometimes considered where there is a large amount of equity in the property.
From what youve said, have you considered an IVA ? ( Individual Voluntary Arrangement ) This would need to be set up by an Insolvency Practitioner (Accountancy firms usually) but would mean your creditors agreeing to receive only a percentage of what you owe them; therefore reducing your debt & time taken to repay it. It is more formal than a DMP but not as serious as Bankruptcy. Not sure how acceptable it would be with a DMP in place but might be an option worth exploring.
Good luck with it all & please get some advice from the CAB specialist debt advisor or similar.

whichwitchisthis Sat 07-Nov-09 16:42:15

thanks everyone, 3girls we aren't paying Payplan anything it is free grin

DH has phoned the debt company and asked her to explain to him what she was saying as we were sure they couldn't do this and she has said that they would take us to court to obtain a CCJ which like you say take into account your current expenses and set repayments, she however said that the court would not view the debt management plan as an expense so they would view the cash we use to pay that as an expense, and therefore the payments they set us would be very high

She then went on to say that when we default on the exceedingly high payments that they would then either obtain a charge on the house or a forthwith judgement

She said we have the choice to agree to a CCJ and a charge on the house (just to ensure we pay them) or to just a CCJ but they would set the payments so high and then they would obtain a forth with judgement and that would be worse

She said to seek advice and that we didn't have to attend court (and wouldn't be able to as it's in Northampton and we are in Leeds) and we had to send paperwork in

I'm going to CAB on wednesday as it's only open two afternoons a week here hopefully they will confirm what you have all said

ABetaDad Sat 07-Nov-09 16:46:58

Do go to court if you can. If you do not there wil be a summary judgment. If you go then you can present your side of the story. The creditor gets a much easier ride and gets what they want if the debtor does not turn up.

I know many repossessions, for example, go through on the nod just because so many people do not go and present their story to the judge.

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