A minimum level of consumer credit debt may be set in law before an order for sale can be issued, under proposals launched today by the Ministry of Justice.

The MoJ has launched a consultation on the proposal, as it considers ramping up safeguards to ensure that only home owners with a minimum level of debt can have an order to sell their homes made by the courts.

It said that while only a small proportion of charging orders result in the property being sold, there is the risk in the current economic environment that more people could lose their homes because of relatively low amounts of debt.

Steve Jackson of BeatMyDebt.com said "We are seeing more and more people receiving charging orders against their property. Any additional safeguards which protect them from subsequently losing their homes over relatively small debts will be welcomed."  

Under the current system, property owners who have unsecured debts such as credit or store cards, which they have been unable to pay, can have a charging order placed against their property to secure the debts.

Forced sale may increase due to recession

In a small number of cases the charging order is followed by an order for sale, when a judge decides that the property must be sold immediately to settle the unsecured debt.

Bridget Prentice, justice minister, said: "We know that only a small proportion of charging orders result in the property being sold, so it’s rare for a debtor to lose their home because of things such as unpaid credit cards. There are currently a number of safeguards in place to protect homeowners, while ensuring the creditors who need to recoup their money are able to do so."

"But it’s important that the government consider whether there is a risk that the numbers will increase due to the current economic situation, and whether this could result in more people losing their homes because of relatively low levels of debt which they are unable to pay."

She added: "We’re asking for views on whether a minimum threshold should be introduced in law, to prevent this from occurring."

The consultation will last until April 30.