This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7365786.stm

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Court orders to secure loans rise Court orders to secure loans rise
(1 day later)
There has been a sharp rise in the number of banks trying to secure loans and credit card debt against borrowers' properties, figures suggest.There has been a sharp rise in the number of banks trying to secure loans and credit card debt against borrowers' properties, figures suggest.
The number of lenders seeking court orders to secure personal debt against property hit 131,644 in 2007, representing a 42% rise year-on-year. The number of lenders seeking court orders to secure personal debt against property hit 131,644 in 2007, a 42% rise year-on-year.
The Ministry of Justice says the data is provisional but that it is "unlikely to change".The Ministry of Justice says the data is provisional but that it is "unlikely to change".
Since the credit crunch banks are more cautious about their lending policies. The trend is a sign of the pressures on consumers with too much debt.
These court orders, known as charging orders, give creditors security for the debt, so when a home is sold the lender is repaid from the proceeds. "It's a drastic increase," said Mark Sands of the accountants KPMG.
A charge on a home does not however compel the debtor to sell the property. ""You take on an unsecured loan or credit card, you fall into arrears, the bank decides to take you to court, and if you still don't pay you end up with a charge imposed on your house by the court.
While the rise in applications for charging orders has increased 42% over a year, the growth over two years - between 2005 and 2007 - is close to 100%. "Lenders are looking at all options to get their money back," he added.
Security
While applications for charging orders have increased 42% over a year, the growth over two years - between 2005 and 2007 - is close to 100%.
The charging orders are effectively a second mortgage on a home and give creditors security for their loans if they find their customers are having trouble repaying the money.
"Lenders are worried about people's ability to repay and a charging order gives a guarantee to the lender that at some point in the future they will get their money back," said John Fairhurst of the debt advisory company Payplan.
A charge on a home does not immediately compel the debtor to sell their property and the lender usually hopes to be repaid when a home is eventually sold by the borrower.
"What's quite difficult for a creditor to do is to follow that [charging order] through to repossess the house," said Mr Fairhurst.
"Repossessions as a result of charging orders are extremely rare."