Unsecured Credit - Avoiding repossession

The last thirteen years or so have been good times for the economy and consumers alike. Plenty of cheaply available credit has made us all feel richer than we are and as a result many of us have spent like crazy, providing fuel for an insatiable economy and housing market.

Well someone has cut the fuel pipe and the lifeblood of the economy has simply drained away; it’s clear now why this has happened. Let’s get the state of the economy in perspective, the last time that The Bank of England set the Base rate at 3%, rationing of food in Britain had just ended. Those were difficult times economically, our time could in fact be worse.

One thing is certain; the number of redundancies will grow very rapidly in the coming months.  What happens if we lose our income and are unable to meet our commitments?

Well if you had watched Panorama on the 10.11.2008, “can’t pay, wont pay”, you would have been surprised to learn that failure to pay can result in an order for sale of your property.

But how?

If you owe somebody money and they have a CCJ entered against you, which you do not satisfy, the lender can apply to the courts for a Warrant of Execution. The court bailiff will attempt to satisfy the judgement by seizing goods to the value of the judgment. If they are unable to do this, the “person” to whom the money is owed can apply to the courts for a Charging Order, charging your property with the debt; effectively turning an un-secured debt into a secured debt. If still you fail to pay, they can apply to the court for an order for sale.

Disturbing, and it would seem that more lenders in the current climate are employing heavy handed tactics, using hard nosed lawyers, that have partnership names like “ wolf” and “ grizzly”; gives you an indication of their likely approach

How can you ensure that your debts are paid, when you are not in a position to pay them?

An Accident, Sickness and Unemployment policy or ASU policy can help.

These policies are specifically designed pay a monthly benefit should you be made unemployed through no fault of your own, or you are incapacitated due to an accident or sickness.

In the event of a claim under an Accident, sickness and unemployment policy the monthly benefit will be paid directly to you, so you can prioritise its use as you feel fit. Normally payable for up to 12 months if needed, the benefit is tax free under current HMRC rules. An Accident, Sickness and Unemployment policy does exactly what it says in the literature, so read the Key facts document and policy conditions carefully.

If you have elected to include the Accident and Sickness insurance cover element, do make sure that you disclose all pre existing medical conditions. The rule is, if in doubt, disclose. They are actually not too expensive for the cover that they provide, but as always avoid the policies offered through the Bank’s. A good ASU policy can keep your life and your credit on an even keel, while you find a job or recover from illness.

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