Priority Debt: Secured Loan

This loan is secured either over the property or someone's assets which may make the debt a priority. However, it is usually another loan on top of the existing mortgage. Internal referral to a debt adviser is required. 

The debt recovery process for secured loans involves formal default notices, court action to obtain a County Court Judgment (CCJ), and, as a last resort, repossession and sale of the secured asset (e.g., home) to recover the debt. Lenders must follow strict pre-action protocols, including contact to explore repayment alternatives before forcing a sale. 

The Secured Debt Recovery Process

Initial Default: If payments are missed, lenders send a notice of arrears (after 2 missed payments) and a default notice (after 3–6 months).

Communication & Negotiation: Lenders are required to contact the borrower to discuss repayment plans, which may include extending the term or reducing payments.

Formal Letter Before Action: A, formal letter is sent, stating the amount owed and providing a deadline to pay or face legal action.

Court Action (CCJ): If, unpaid, the lender applies to the court for a CCJ to legally confirm the debt.

Repossession and Sale: If the debt remains unpaid after the CCJ, the lender can apply for a court order to repossess the secured property and sell it to cover the loan, interest, and costs.

Get help

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