losing your house for a few hundred

Some people are being forced to put their homes at risk because of debts of as little as £600, the Office of Fair Trading has found.

The regulator is clamping down on lenders who tell customers to pledge their homes against non-mortgage debts. The process of securing these debts is known as a charging order.Financial companies have the right to apply to a court for a charging order when borrowers have failed to keep up payments on credit card debt, loans or hire purchase commitments. This order turns these unsecured debts into debts secured on the borrower's property. Over the last five years, the number of charging orders applied for has risen from 45,000 to 164,000.

"Our investigation uncovered instances of charging orders being used to secure debts of less than £600...Where we consider the using of charging orders to be unfair or oppressive we will take action to protect consumers." said Ray Watson, the OFT's director of consumer credit.

Four providers have been ordered to "address concerns" about the way some consumer debts are enforced. The four are: Alliance and Leicester Personal Finance, HFC Bank - part of the HSBC group, American Express Services Europe, and Welcome Financial Services - part of Cattles.

More than 7% of adults will go into the red to pay for Christmas, with credit cards the most popular way of borrowing, a survey has found. Four out of every 10 people will already have debts, on top of mortgages and student loans, when they start their Christmas shopping. Some 69% will put the cost of presents and festivities on credit cards, 23% will use overdrafts, and 8% will take out a loan.


"We know times are tough," said Moneysupermarket's head of loans, Tim Moss. "Our research shows that almost 20 million consumers will be heading into the most financially stressful period of the year already in debt."