Most of us know what it is like to have credit card debts hanging over our necks, but thankfully many of us are also able to get the debt repaid sensibly without getting into too many problems with the lender. However, when it comes to finances times are changing for many people, and the difficult climate has made it harder for many to cope with their credit card debt, especially as the
0% balance transfer credit card market declines.
You may think that missing your credit card repayments and defaulting on your credit card debt will mean nothing more than a slap on the wrist from the provider, a bit of hassle from the creditor, and a black mark on your credit file. However, in actual fact the consequences could be far worse, as you could end up losing your home for an unpaid credit card debt of as little as £1000.
A legal loophole for lenders, known as the charging order, could mean that if you have unpaid credit card debt you could be forced to sell your home, even if the debt is relatively small. Whilst these charging orders came into force in 1980 their use has increased by one hundred percent over the past two years, with an increasing number of people failing to repay their credit card debt.
Many are unhappy about this legal loophole, including Vince Cable from the Lib Dem party, who said: "No one should be allowed to lose their home simply because of a credit card debt. More needs to be done by the government to ensure that lenders simply do not act overzealously, and only take possession of properties as a last resort. The fact that banks can now kick people out of their homes for not keeping up with their unsecured debts is very worrying."
However, unless and until something is done to stop lenders from forcing house sales for even small credit card debts, it is important for those with
credit cards to ensure that they do all they can to avoid falling behind with repayments. This could mean simple steps such as to
compare 0% balance transfer credit cards to move high interest balances from existing cards in order to cut out interest, speed up repayments, and reduce the repayment amount.
