Charging Order? The myth

eggbox

RayP

Thanks for the update and please keep the site updated on your progress.

I think its important for people who read this thread to understand that selling your home won't (most likely) be the end of your creditor chasing your debt. However, the information pooled on here should mean we aren't forced to use funds ploughed into keeping a roof over our families heads to repay off this type of debt. But we need to use a bit of "common sense" when we do sell up and move on.

I've vented my spleen a few posts back about how disgraceful it was that a creditor can charge monsterous rates of interest based on the "risk factor" of "unsecured" lending only to, then, be able to have security for the debt in the long run? As many others have said - where was the "your home may at be at risk etc.." warning on these loans?

eggbox

Further evidence of a Creditors limitations can be found here with an explanation by a Director of Education for the Land Registry.

As you will see in Section "What Restriction" it states a Form K Restriction is only a means of notification of a property being sold. Not an automatic right of payment.

http://www.practicalconveyancing.co.uk/content/view/7677/1134/

weary

hi
we have a charging order on our home and the debt is my partners we have a joint mortgage.
so if ive read correctly we wont have to sell our home if we dont want to and if and when we do does it mean we wont have to pay them back?
also what if there were more than 1 charging order (there isnt at this moment in time but its looking a bit iffy)
so basically im asking as long as we stay here and dont sell it just means we have no credit rating and cant borrow again?
thanks in advance

terryw

It would be very unusual for an order to be made for the house to sold.....if there are any attempts at this, immediately obtain legal advice. Yes, it is likely that your credit rating is ruined and it will be difficult if not impossible to obtain further credit.

weary

thanks no further borrowing is a good thing

eggbox

Weary

As TerryW says, it is unlikely a creditor would get an order for sale on your house (and especially for credit card debt if that is what yours is for) but a search of the Internet will show you virtually non of them try.

My feelings on this is they know its unlikely and will cost them a fair bit of money to try so don't proceed (but if anybody reading this has had experience of an order for sale please post!)

It would appear that up until now a creditor with a Restriction has had a very easy time collecting their debt when when houses are sold as it's been perceived that they should "automatically" be paid. That is NOT the case and the Form K Restriction only has a power of notification of a sale by the debtor.

Hopefully, the more people who are made aware of this fact (and the more instances that are verified where people haven't paid a creditor upon sale) then creditors may see this avenue of trying to secure a debt as a waste of time.

Sparklyfairy

Egg I have read on the CAG site that if charging orders weren't available for creditors to use they would then go for forced bankruptcy - which can be much worse. After reading this thread I'm more than happy with my Restriction thank you very much - lol!

eggbox

Hi Sparkly

Yes I read that too but I disagree with the opinion expressed. The simple reason being that Bankruptcy encompasses all debts and there is no guarantee the creditor will come out with anything substantial or at all.

The reason the Charging order route is taken by a few creditors is because they are trying to, ruthlessly, get priority for their debt to be paid first! A Charging Order debt (I think I am right in saying) even takes priority over bankruptcy debts in that it is not included in the bankruptcy dealings. So Charging Orders will still be the first route for "sole owner" debts which have to be paid off before a house can be sold as it secures there debt where bankrupting someone wouldn't.

But where a "joint owner, sole debt" exists, I believe trying to bankrupt someone would be highly risky for the Creditor as, I believe, the person being bankrupted can sell their share of the property for a token amount to the other joint owner (I stand to be corrected on this but that is what my understanding is). So it doesn't, to me, make any business sense for them to do this.

Remember, all the Creditor is interested in is trying to secure repayment and it won't spend a few thousand pounds on risky ventures. And that was my point about Restrictions.

Up to now it would appear that Creditors have had an easy ride collecting their money off Restrictions (through ignorance all round it would seem) but a little scratching of the surface has highlighted it doesn't have to be that way. So if more and more people are made aware of this fact I believe Creditors would be reluctant to waste their money going down this route once they realise it isn't a foregone conclusion they will be paid.

Hopefully, then, these Creditors will have to become more reasonable in accepting repayment plans for debts and a lot more people won't have to suffer the fear and dread of thinking that they are going to lose their home.

Sparklyfairy

Excellent points, Egg. Yes, creditors must have collected a fortune off the backs of Restrictions & I personally feel so much more empowered by this thread now that the surface is scratched!

Although I know virtually nothing about bankruptcy, I agree with you in that charging orders aren't included in them so your points are spot on. Thanks again!

stress3

hi bluback.iv read ur post and alot of solictors are unaware of bthis they say no debt has to be paid?