Unsecured Loans

[Haggisdj]

Is it possible for a creditor to attach a loan agianst someone's property and then, further down the line, force the sale of their home?

[Loosehead]

Yes, if the loan is not paid as agreed.

If a loan is secured against the property then a creditor can apply to a court for posession of the property so that it can be sold and the debt repaid, any residue will be returned to the original owner, this is what happens when a mortgage is'nt paid and the lender reposeses.

Courts will generally award posession if the lender can show that the borrower hasn't made the agreed payments for a significant amount of time.

[Loosehead]

Sorry I just realised you are talkning about Unsecured loans.

A lender can attach a charge to a property after obtaining judgement (CCJ). So for example if your house is worth 200,000 and you owe someone 10,000 and you have a mortgage of say 50000. the creditor can first obtain a CCJ and then obtain a charge on your property, they cannot force a sale but they will be given their money + interest when the property is sold, after the main lender, you get what's left. Depends how much you owe, for smaller amounts they can send in baliffs to recover goods and chattels to the value.

[Haggisdj]

The loan is not secured against the house.  I was made redundant and my insurance made payments on the loan.  The insurance ran out before I could find employment.  I am now back working but for �11k less.  I have made offers but I am told they are not enough.  I went to the CAB and arrived at the same figures.

They will not alow me to make lower payments... what is the solution?

[Loosehead]

You should try and pay enough so the debt reduces, ie at least the interest. The lender may demand the loan be paid as originally agreed but in reality if you can show you are making an effort to pay something then a court will look at you sympathetically. The lender is trying to intimidate you. This is what I'd do.

1. Work out how much per month the interest is

2. Find out the sort code and account of the loan account

3. Set up a standing order to pay at least the amount in 1. above but as much as you can.

Explain what you are doing to the lender, keep copies of all correspondence including your own. The only way they can get a charge on your house is if they obtain a CCJ and a court will generally not award judgement against someone who is paying a significant amount.

Do not bury your head and pay nothing, they will go after you!

[WoWo]

It is a common misconception that unsecured loans cannot result in losing your house. As pointed out by loosehead it's possible for the company to get a CCJ which could ultimatley lead to you losing your home.

But it's a lot more difficult for a company to get the money than if it was secured. If you have made reasonable attempts to renegotiate the loan payments a court is likely to take this into account and within reason they are more likely to tell the loan company to accept reduced payments than for them to force you to sell your home.

Good luck with it.