Charging Order? The myth

eggbox

I agree, sparkly, but the whole issue of allowing a creditor to "secure" a debt that has benefitted from high and variable rates of interest leaves a nasty taste.

Especially, where no recalculation of those rates are taken into account when a CO is granted security meaning that in some cases the creditor has already been repaid his original sum lent (from those high interest rates) but is still allowed "security" by a court for a debt largely made up of high, compounded interest.

This point is certainly why I feel so strongly about "using the law" when we do eventually come to sell our property, as my ex's creditor raised her interest rate to 30.5% BEFORE she defaulted on any of her loans. As the recession hit and she lost her job (twice) she could only maintain a minimum repayment and pleas to her creditor to reduce her rate to something like 12.9% (which she had signed up at) were treated with utter contempt. They actually said they were "contractually obliged to charge that rate". The penny dropped for her when a debt counsellor (who also couldn't persuade her creditor to lower the rates) calculated that in the next three years (if she could only pay minimum) she would pay them nearly £4000 but her debt owed would rise another 50%!

In any universe, for a creditor to be able to charge the above rates because the loan is "unsecured", but then be able "secure" that debt later without any financial redress to what has been charged is perverse. I'm also not swayed by people who think Bankruptcy will rise for this type of debt if a creditor can't use a CO route. Simply because they will know they have been repaid a large chunk of the original debt (by those high "unsecured" interest rates) and going for Bankrupty involves ALL creditors which they then have to share whats available with them. I doubt then, in that situation, they would see that the costs involved would be worth it to them.

Sparklyfairy

Excellent points, Egg. I see your point re why bankruptcy wouldn't be worth it for creditors, plus it's about £1k for them to start bankruptcy proceedings, right? The GREED is just unbearable. Surely creditors also get insurance payments for those debts that go unpaid by debtors as well...seems a win win situation all around for the banks imo. It does make me wonder why the changes to charging orders were made in 2003..for the benefit of the debtors.. Your ex's situation sounds similar to mine..MBNA's apr became unsustainable for me, wouldn't agree to lower rates (even for a short period) started my own dmp, they never agreed to the repayments (paid them £1 pcm - yes, we were that skint!) Then I recv'd my ccj. I did look into enforceability, but as it was a post 2007 debt, I found there wasn't much I could do. However, now with the restriction (inc the 8% interest added - grrr!) I can at least rest assured that all mbna get is a measley £1/month - and I flatly refuse to sell my home unless my solicitor works in MY favour & MBNA will get zilch..they already made a fortune from me tbh..

eggbox

MBNA here too, sparkly (using their henchmen Restons!)

Can I ask if you get sent a statement of what you owe as my ex, apart from receiving a fairly limp threat of further action about a week after the CO hearing, has never received anything regarding how much is owed??

Sparklyfairy

Nothing. I got mine from Restons in Nov 2010 & have YET to receive a statement. I have received 2 letters & a few phone calls regarding upping my instalment order & I basically know they haven't a chance in hell in making me pay any more, so they can whistle. This was all in Nov 2011 & I haven't heard a thing from them since...

eggbox

My ex's has been over 18 months so they seem consistent in no contact?

Sparklyfairy

Yes they do & I do seem to remember the dj stating that I was to receive a yearly statement from them....

Ganymede

eggbox wrote: »

I feel, in many cases, creditors now are only taking proceedings to the Interim CO stage on jointly owned property as they get the same result (ie a Restriction placed on the Land Registry) as they would with a Final Charging Order but without the added Court costs.

This can't be correct as you pay the costs when you issue the ICO application so youhave to pay regardless.

Sparklyfairy

Gany, why then do so many creditors now seem to essentially "stop" proceedings once they gain the almighty ico? Explain..

Edited to add that creditors surely DO have added costs- especially for a final charging order. 1. Solicitor's fees & 2. Court costs. Yes these will be charged to the debtor ultimately if the co becomes final, but the creditor incurs these costs until the restriction is (sometimes) paid. Surely they're seeing their Restrictions aren't being paid as previously thought & are left funding a useless enforcement..

Gany, I realise this is your first post on MSE & I welcome you. However, I also realise you have issues with Eggbox from the CAG website. Please do not come on here for the sole purpose to intimidate or pick minute holes in an unsubstantiated argument you may/may not have on this subject, as you have above.

eggbox

Ganymede wrote: »

This can't be correct as you pay the costs when you issue the ICO application so youhave to pay regardless.

As I have said regarding this issue, it's only an opinion I have no direct knowledge if it's true? But as sparkly states; there has to be a reason why creditors are stopping at the ICO stage so often, now and surely the creditor has to incur further costs if it proceeds to a final hearing even if it's only the attending Solicitors costs (which will be a few hundred at least?)

sparkly

I gave no issue with Ganymede (or anyone else from CAG) coming on here as it's an open board. But I do think it would help people reading these threads if people nailed their colours to the mast more clearly rather than trying to claim (as they do on CAG) to be totally neutral on the subject.

My beef on this matter is that I think it is grossly unfair for creditors, who have received huge amounts of money through variable, high interest rate loans from customers under the guise of that loan being "unsecured", to then be able to, seemingly, use the law to gain "security" for the return of the money loaned. This beef is compounded by creditors being able to arbitrarily raise those interest rates to, in my opinion, obscene levels when the bank base rate virtually hit zero. That last tactic unfairly forcing many people into the situation of being unable to maintain repayments. It was greed and avarice of the worst kind and targeted vulnerable people first in attempt to extract as much money as they could in the shortest period of time.

If the law states creditors can go for CO's after this type of debt at present then there is nothing that can be done to avoid it happening. However, if the law also gives no power of repayment to the creditor with that CO, in certain circumstances, when a property is sold; then that has to be accepted as well.

Sparklyfairy

I agree, Egg. I just feel it's highly suspect for someone who is usually on the CAG to make their first appearance on MSE to make a miniscule critique at your comment, hence continuing an argument that perhaps shouldn't clog up this thread iykwim..just my opinion, though.

I wonder how many creditors have found this thread (& others similar, usually linking this thread within) & have changed tactic as people are starting to know their rights....