- 11
- Jun
Citizens Advice has raised concerns over a planned law which could exacerbate debt management difficulties for those struggling to make loan repayments.
Under the proposals, the government will cut off the right of homeowners living in Wales and England to avoid repaying money owed on secured Loans and other forms of borrowing while selling their property.
As a result, creditors will be able to secure debts against properties, even if debtors are making loan repayments imposed on them by a County Court Judgement (CCJ).
The advisory service’s Sue Edwards told BBC Radio 4’s Money Box programme: "If the government intends to make changes, it does need to make sure that people who do want to repay but can only afford little amounts don’t lose their homes."
Currently creditors can only reclaim debts through a Changing Order, once a CCJ payment has been defaulted on.
Malcolm Hurlston from the Consumer Credit Counselling Service added that the move would give "creditors the power to turn debts which are effectively unsecured debts into secured debts".
Last week, shadow chancellor for the Liberal Democrats Vince Cable suggested Britain is set to witness "growing evidence of distress in the form of arrears and repossessions" unless financial providers are more responsible in lending to borrowers who are already "heavily indebted".
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