A new law could see more people with debt problems in England and Wales at risk of losing their homes, according to Citizens Advice...

In future creditors will be able to secure debts against properties, even if the debtor has kept up court repayments.

The government says the change will close a loophole which home owners use to avoid repaying debts when they sell. It says vulnerable debtors will be protected.

Currently, creditors can get their money back when a home owner sells their property, if they obtain a Charging Order from a court.

They can only do this if the debtor has defaulted on a payment plan, known as a County Court Judgment.

But proposals outlined in the Tribunals, Courts and Enforcement Bill mean they will be able to do this even if the person in debt hasn't defaulted on payments.

Homeowners could be ‘forced’

Sue Edwards from Citizens Advice told BBC Radio 4's Money Box she's particularly concerned because although in most cases a charging order means a debt is repaid only when an owner chooses to sell the property, in some cases people can be forced into one.

'If the government intends to make changes, it does need to make sure that people who do want to repay but can only afford little amounts don't lose their homes.'

Citizens Advice says its bureaux are already reporting more firms are opting to secure their debts by going to court to obtain a charging order even when someone is ready to make repayments.

It fears any move to simplify the process as currently envisaged in the new bill will encourage this trend.

Malcolm Hurlston from the Consumer Credit Counselling Service is also urging companies to use any new law with restraint:

'If this new law is used as a blunt instrument, then it could be quite dangerous, because it's giving creditors the power to turn debts which are effectively unsecured debts into secured debts.'

The government says the change is necessary to stop people with big debts benefiting from the sale of a property but then failing to repay the outstanding sum owed from the proceeds.

Vulnerable debtors will be ‘protected’

The Ministry of Justice told Money Box vulnerable debtors will be protected by minimum thresholds below which a charging order on a property cannot be imposed or an order for its sale made.

The thresholds have yet to be set.

Jeremy Sutcliffe, the chair of the Civil Court Users Association, says creditors are frustrated by home owners who say they don't have the cash to pay their debts.

'People's assets are now in their homes. It's fair they (creditors) should have a reasonable chance to obtain payments of their debts by the use of this asset'