Charging Order? The myth

eggbox

nuk
Firstly, your experiences with the solicitors is not unusual in that many posters on here have come to understand that many solicitors are being paid to give advice on matters they don't understand correctly . The restriction on your deeds is a standard  Form K and requires nothing from the creditor to be complied with. As you've correctly highlighted; all that is required is certification from the buyer or his conveyancer, to the Land Registry, that notification has been given to the restricion holder that the property is being sold.

As Land Registry Rep always says, its the actual wording on the restriction that has to be carried out. Therefore, as a Form K does not mention any consent being required from a creditor, then non is required. You can point this out to the next solicitor than contradicts you!

 

nuk

Thanks @eggbox

I thought that was the case, could it be because I'm not actually selling the house?  I'm removing wife from deeds so I can remortgage in my name only.  Might end up having to borrow money to pay this debt off so it just makes the process simpler. Can anyone recommend a solicitor that actually knows what they are talking about, I've spoken to 4 and get a different tale from all of them!!!

Land_Registry

A transfer is a disposition. So you have to comply with the restriction. You don’t need the creditor to confirm receipt of the notification. 

But the restriction won’t be removed after the transfer as there’s no overreaching. Your new lender isn’t very likely to go through with the mortgage as a result but only they can confirm. 

So I suspect your simpler approach is the only one you have here as that way the charging order is paid off, the creditor withdraws the restriction and your new lender secures their mortgage as a legal charge with just you as the legal owner 

nuk

Many thanks for the info @Land_Registry I've been digging through the paperwork, and its gets a bit complicated or confusing at least, because I think most creditors are linked in some shape or form.  Not sure if I'm allowed to name creditors so will try and leave them out but...

Original Loan was with A, they sold the debt to B, B used C to chase and take to court (im not sure if B and C are actually the same people just different names), restriction was placed in B's name but C carried on managing the account.  Then 10 year later we get letter from D saying they own the account, they had C managing the account on their behalf but now they are using E to manage it.

Crazy isn't it!  I guess what am trying to get at is if the restriction is in the name of B yet D claim to own and we are paying the debt back to E, does that make the restriction invalid? And grounds for removal from the registry?  We are also paying 3x more back than what the court ordered and have been for many many years.

Land_Registry

nuk said:

Many thanks for the info @Land_Registry I've been digging through the paperwork, and its gets a bit complicated or confusing at least, because I think most creditors are linked in some shape or form.  Not sure if I'm allowed to name creditors so will try and leave them out but...

Original Loan was with A, they sold the debt to B, B used C to chase and take to court (im not sure if B and C are actually the same people just different names), restriction was placed in B's name but C carried on managing the account.  Then 10 year later we get letter from D saying they own the account, they had C managing the account on their behalf but now they are using E to manage it.

Crazy isn't it!  I guess what am trying to get at is if the restriction is in the name of B yet D claim to own and we are paying the debt back to E, does that make the restriction invalid? And grounds for removal from the registry?  We are also paying 3x more back than what the court ordered and have been for many many years.

No and none it seems. A charging order identifies a debt. Who the creditor is comes second as it’s still the debt. Debts often change hands but they are still a debt 

catey92

Me again, my parents have a  restriction on their property was placed by Kings Hill No 1, now owned by Cabot.   They will be paying the debt on completion, but their solicitor has now asked for confirmation that Cabot can remove the restriction , as it is Kings Hill who are named as the company with the restriction order.  Does anyone know if this will be problematic? 

Land_Registry

catey92 said:

Me again, my parents have a  restriction on their property was placed by Kings Hill No 1, now owned by Cabot.   They will be paying the debt on completion, but their solicitor has now asked for confirmation that Cabot can remove the restriction , as it is Kings Hill who are named as the company with the restriction order.  Does anyone know if this will be problematic? 

Provided they include sufficient supporting evidence to confirm that the protected interest is now theirs then it shouldn’t be problematic. 

Evs_1955

Hi I wonder if anyone can help ? Next month I have to appear ( via internet) at my local money claims court regarding a pending charging order on my home. The original debt was a Lloyd’s credit card , now in the hands of a debt collecting agency. Up until April last year I had a direct debit set up with them that had run for two years with no defaults. I’m self employed and when lockdown first hit in March my income , like so many others ceased. My initial knee jerk reaction was to cancel certain direct debits to stem the flow of money from my account with the intention of prioritising the most important payments. Within a few weeks my partner was diagnosed with a brain tumour which totally overwhelmed us. 

I struggled to cope with the daily challenges of his seizures and many appointments . Stress and anxiety were off the scale and continued throughout the year.  As a result I found it impossible to focus on everything at once and the debt collection company’s demands were ignored. So here I am facing this charging order, my partner is unaware of the situation , the house is in my name and my mortgage is paid . 

I’ve objected in writing , explaining my situation and provided them with copies of letters from the neurologist and surgeon to prove I’m not making it all up. 

I’ve offered to pay £1100 which covers the missed payments plus at least £700
( the total debt is £10,000) 
My greatest fear is that I’m made to sell my home. To have this hanging over my head as well as what’s ahead regarding my partner’s health is crippling me with worry and I can’t even imagine what it will do to him if he’s made aware of this. 

Does anyone have a similar experience or some advice on what to expect at the court or what I can do to support my case further ? 

Thanks 

eggbox

Hi Evs_1955

Sorry to hear about your experience, however, the first thing you can put to one side is the worry that you may have to sell your home. You won't. Whilst a charging order gives the creditor the power to apply to the Court for an Order For Sale (which forces the sale of a property to repay the debt); they have to convince a Judge to do so and, unless the Judge has completely lost their mind, they would never grant the sale given your circumstances.

There are several factors why they wouldn't grant a sale, the main one being it’s your primary residence with the condition of your partner not far behind. However, this is all irrelevant as the likelihood of a debt collection company applying for an OFS is, statistically, extremely rare. Court records show that less than 0.05% of charging orders granted proceed the OFS stage.

There are several reasons why this is with the top reason being that creditors know how difficult they are to obtain (hence they don't try very often.) But Judges also understand the main reason a creditor pursues a CO is, largely, to secure the "full value" of their debt. To explain this, whilst the amount owed to Lloyds Bank was £10,000, the DCA will only have paid just 5 - 10% of this value to obtain ownership of the debt.

Judges will understand this and the insane amount of profit the DCA has in the value of the debt. Also, a big factor why DCA's pursue the debt to a CO stage is just to add security to the debt obtained. The DCA will bolster their balance sheet, greatly, by obtaining a £10k debt for, say, £1k as the £9k is added to the value of the company.

So, having understood you are in no danger of losing your house; the next step is to ensure you explain to the Judge what you have offered the DCA by way of repayment during a very difficult time for your business, but also at a particularly difficult time for you personally.

Normally, I would advise that trying to stop a Final Charging order being granted is futile as Judges understand they are primarily for security, not a method of trying to sell a debtor’s property.  But due to the covid circumstances that affected your business, and also your partners condition; there just may be a chink of light that you may well be able to convince a Judge otherwise. So, ensure you lay it on thick at the hearing how unfair a CO would be especially as you have offered a repayment of the debt.

As an extra incentive for you to do this, you must understand that if a Final Charging Order is granted it will be registered as an equitable charge on your deeds. This is because you own the property solely and will have to be repaid if you sell the property. Had you owned it jointly, then only a restriction (notifying the CO) could be registered and, as this thread explains, the creditor wouldn't have so much certainty of repayment when you sell.

So do all you can to try and avoid the FCO but don't be too deflated if you fail as its, 99%, par for the course. 

Good Luck!

 

Evs_1955

Thank you so much for your response, it’s definitely helped relieve the stress of this whole situation.  Can I just ask one more question ? I’m in a position to pay the £1,100 I mentioned off my account on the debt collector’s site, am I right in thinking this will benefit me on the day in court ? Thank you again for your help !