Secured Debt Help: Managing Loans & Protecting Your Assets
So, you have debt secured to an asset, and your financial situation means you can no longer make the required payments. Do not panic at all; you’re in the right place to understand what this means for you and how to handle it.
First things first, understand what type of secured debt you have and what it’s secured to. This makes a difference.
Understanding Secured Debt
What is Secured Debt?
Secured debt is a type of debt linked to a specific asset (such as a home or car). If you fail to repay the debt, the lender can seize the asset to recover losses.
Types of Secured Debt:
- Mortgages
- Car Finance
- Charging Orders (sometimes)
- Secured Loans
Options for Managing Secured Debt
If you are struggling with secured debt payments, exploring your options is crucial.
Mortgage Arrears
If it is a mortgage, we have a dedicated section where you will find all you need to tackle the situation. You can head over there now by clicking here.
Car Finance
If car finance is the issue, we’ve got you covered. Head over to that section by clicking here.
Charging Orders
These are secured debts; in most cases, they start as unsecured and are converted to secured. If you’ve had a County Court Judgment (CCJ) and the creditor has managed to secure a Charging Order, you will likely have been asked to make specific monthly payment amounts towards the debt to prevent the creditor from applying for an Order for Sale.
If you are struggling to make these payments, you should contact the creditor and the court to see if the amounts can be reduced. Trying to get an agreement in place is essential rather than just making zero or reduced payments. You will be risking your property if you don’t do this.
Charging Orders Explained
These are secured debts; in most cases they start out as unsecured and are converted to secured.
Understanding County Court Judgments (CCJs)
If you've had a County Court Judgment (CCJ) and the creditor has managed to secure a Charging Order, you will likely have been asked to make specific monthly payment amounts towards the debt to prevent the creditor from applying for an Order for Sale.
Preventing an Order for Sale
Judges have been given guidance not to grant an Order for Sale so easily, so there’s a good chance you will be able to come to an agreement that will relieve some of the financial pressure. You need to understand Charging Orders fully; you can do that by clicking the article in the purple box below.
Communicating with Creditors and the Court
If you are struggling to make these payments, you should contact the creditor and the court to see if the amounts can be reduced. It’s important you do this and try and get it agreed rather than just making zero or reduced payments. You will be risking your property if you don’t do this.
Secured Loans and Your Assets
Again, communication is key if you’ve taken out a loan secured to an asset, such as a property, and you are struggling with the payments.
Prioritising Communication
The creditor has already secured the debt, so they will know their money is very safe. Therefore, if things get tough financially, don’t suffer in silence. Contact the creditor to see your options to relieve the pressure without risking your assets.
Exploring Alternative Solutions
Can you have a payment break? Can you extend the length of time you pay the loan back? Remember that a judge will also know that the creditor's money is safe, which may benefit you if the creditor wants to push for an Order for Sale.
Alternatives to Secured Borrowing
Secured borrowing is more risky than unsecured borrowing. We always recommend restricting secured borrowing to mortgages only. If you need to borrow or acquire credit, it is much less of a risk to your assets if it’s unsecured.
Don't Panic - Know Your Options
Going for the asset is often the last resort for the creditor. Be aware of the options you have to prevent losing it. Don’t panic, and make sure you are communicating (in writing). If you are not paying or communicating, you may leave the creditor no option but to go for the asset. Take a look at the articles we have in the purple box below to get your mind right and relieve some of the stress you may be under...
