Saturday, November 8, 2008

Homes Threatened by Labour’s Law Changes

Ministers are to give bailiffs new powers to break down the door of family homes to collect debts, such as an unpaid parking ticket or TV licence.

Parliamentary spokesman, Richard Normington commented:

“Borrowers must be responsible for their debts, but Labour lacks any sense of proportion. The government is to allow unscrupulous lenders to force families to out of their homes for small sums, such as missing credit card payments.”

“First, families should not be forced to sell their homes to repay relatively small debts. That is why the Conservatives propose new rules to prevent anyone from being forced to sell to repay unsecured debts of less than £25,000.”

“Second, innocent people will but put at risk. I know from first-hand experience that the databases used by firms are often faulty. One company is trying to collect for a debt racked-up by someone who used to live in my own house; despite letters and phone calls to say they had left before I moved in almost a year ago!”

Further Details

Losing your home if you can’t pay your credit card: The Government is pushing through new laws to make it easier for lenders to obtain charging orders. These orders convert unsecured debt, such as credit card debt, into secured debt by giving lenders a stake in the borrower’s home. They are also the first step in obtaining an ‘order of sale’. The Tribunals, Courts and Enforcement Act 2007 amends the law to allow charging orders to be granted even when the borrower is paying off their debt in accordance with a county court judgement. Although the new provision has been passed into law it has not yet been ‘commenced’. Conservatives are calling for the Government to pledge that they will not enforce this section of the Act, and the provisions will be repealed at the earliest opportunity.

New bailiff laws: Through the same Act, the Government is changing the law to increase bailiffs’ powers of entry and undermines long-standing common law rights dating back centuries. This also raises the prospect of such powers being used to enforce parking tickets, an unpaid TV licence, an unpaid congestion charge or unpaid credit card debts.

Over and above existing entry powers: Prior to this Act, bailiffs mostly only had rights of ‘peaceful entry’ - entering a home if they are allowed in, if the door is left unlocked or if a window is open. They cannot enter by pushing past people to get inside, by breaking windows, doors or locks, or if asked in by a young child. (House of Commons Library, Standard Note SN/HA/4103: Bailiffs, October 2006, p.4).

Public in the dark on new entry powers: A power to force entry does already exist for unpaid fines imposed for criminal offences, by virtue of a law passed by Labour in 2004. The Government has refused to publish in full its ‘bailiffs bible’ that has been produced on the powers to force entry under the 2004 Act, raising additional concerns about how bailiffs will operate when using their new powers under the 2007 Act (Guidance from HM Courts Service; issue highlighted in Hansard, 5 March 2007, col. 1354).

Government warned: Conservatives opposed these plans when the law was before Parliament. Shadow Minister, Henry Bellingham MP, warned: “When there is unprecedented debt in society, when huge heartache and grief are caused by debt and there is ever-increasing abuse by bailiffs – albeit only a small minority – it is not the time to be giving bailiffs extra powers and putting into reverse some key constitutional principles” (Hansard, 5 March 2007, col. 1354).

The Conservative Alternative. Conservatives are calling for new rules to prevent families from losing their homes as a result of relatively small credit card bills or other unsecured loans. We would introduce a new threshold to prevent borrowers from being forced to sell their homes to pay off unsecured debts worth less than £25,000. Unsecured debt, such a credit card bills, carries very high interest rates because, unlike a mortgage, lenders cannot take ownership of an asset if the borrower defaults. These high interest rates, often as much as 25 per cent, are the cost of this extra risk. But, currently lenders can charge extortionate interest rates and then obtain security through charging orders and orders for sale. We do not believe that families’ homes should ever be at risk as a result relatively small credit card debts, so will introduce new legislation to ensure that orders for sale are never issued for unsecured debts worth less than £25,000.

8th November 2008

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