Homes are at risk in court bids

SOARING numbers of Wigan homeowners facing debt have been landed with a controversial court order which could lead to the forced sale of their homes.

More than 2,500 charging orders have been dished out in the borough in the last six years despite criticism of the measures by the Office of Fair Trading (OFT).

Concerns have been raised over the use of charging orders, which enable lenders to claim any cash left over following the sale of a customer’s home to repay the money they are owed.

The order effectively turns an unsecured debt into a secured one, and the creditor can go on to obtain a second order forcing the person to sell their property to settle their borrowings.

The OFT said that although charging orders were a legitimate way for creditors to recoup unpaid debts, it had found problems with the way some lenders were using them, which were inappropriate for the amount owed.

In some cases, charging orders had been obtained on debts of less than £600.

Today Wigan’s Citizens Advice Bureau (CAB) urged those facing debts to seek advice at an early stage and said only a small number of cases led to an order forcing the sale of a property.

Wigan CAB manager Chris Harris said: “The increased number of charging order applications in Wigan is not surprising. It is a national trend – it has risen across the country by about 150 per cent since 2005 – and courts tend to grant them in the majority of cases.

“However, although charging order applications are regularly accepted, this does not mean that they will automatically be followed by orders for sale.

“It is important for people to respond to claim forms for debt received from the court, and to seek advice at an early stage.

“If they admit that they owe money but need time to repay, it is important that they respond with a carefully considered offer, even if the offer is very small.

“If the client leaves this section blank, or writes ‘nil offer’ or writes an offer of £0.00, the creditor is entitled to put in a default judgment on the basis that the client has not replied to the claim form.

“This means the creditor may immediately move to enforce the judgment.”

Latest figures reveal that since 2005, the courts have handed out 2,510 charging orders in Wigan, and dealt with 3,270 charging order applications.