Charging Order? The myth

poorpet

I am seeing solicitor this week about what can be done. I just want to know what power they have to make me liable for her debts?Also will I have to pay the whole sum she owed.No idea how much yet.I didn't know she had an estate as I expected house to be mine,having always paid mortgage and with only 7years more to pay.Thank you Egg box for quick response.

eggbox

You can't be made liable for your wife's debts, so don't worry on that score. And I'm pretty certain that if your deceased wife's estate is under £250,000 then it does automatically pass to you in the absence of a will.

A solicitor will hopefully point you in the right direction but if you have read this thread through you might understand you will have to proceed with caution on their advice regarding your wife's Charging Order. As she was a joint owner of the property (and not the sole owner) any Charging order your wife will have received can only have been registered against her "Beneficial Interest" in your property (or her share of the Equity). You need to make sure your Solicitor understands this as many try to treat them as an equitable charge which are far different.

But do understand that any debts your wife owed can only be sought after by creditors on any money left in her estate. If there is not enough to clear the debts (or anything at all) then that's tough for the creditor but that's where it ends and it's also nothing to do with you.

yellowduck_2

am I correct in understanding that as from October this year a creditor can obtain a charging order even if you are paying installments and have not missed any? This has really scared me. I owe Nat West £5,800 and I am making token payments of £50 a month as this is all I can afford from my part time wage and I am not well enough to increase my hours even if any were available. Reading about changes to Charging Orders it seems that they will now be easier to obtain and I am very worried about this as Nat West have been going on about putting a charge on my property from the outset and I am sure they will be very quick off the mark come October.

poorpet

Thank you so much Eggbox house is worth about £140,000 had email from solicitor.Made appointment for Thursday.Made a note of your advice about 'share of the equity and not equitable charge' When you say her share of equity is that half of the house price and are creditors willing to accept an offer to settle their claim.Whatever it is I don't know and does this open floodgate for anyone else she owes to put in a claim?Any hopeful advice is so welcome.Can't thank you enough for taking the time and will let you know what happens at my free half hour on Thursday.

eggbox

yellowduck

Yes, sadly, this is what will be available to creditors from October. However, the Court is supposed to take into account the payment plan in place before deciding to grant a Charging Order (which means one will be granted) and an OFS isn't allowed as long as the payment plan in place is up to date.

eggbox

poorpet

Yes your wife's share of the equity is half any profit that would be realised if the house was sold. But remember your wife's creditors only have a legal claim on this money they don't have any automatic right of payment as they would with an equitable charge (which is why you need to be careful with the Solicitor you use.)

From what I have read elsewhere, certain creditors give up any claim on being notified of the death of the debtor so its worth writing to let them know the situation. Those that don't will certainly be open to offers but don't be hasty to offer anything until YOUR legal position regarding your inheritance of your wife's estate is made clear by your Solicitor.

yellowduck_2

eggbox wrote: »

yellowduck

Yes, sadly, this is what will be available to creditors from October. However, the Court is supposed to take into account the payment plan in place before deciding to grant a Charging Order (which means one will be granted) and an OFS isn't allowed as long as the payment plan in place is up to date.

this is awful, am very worried, guess there is nothing I can do to stop it. I have paid off my mortgage but my home is not worth much (about £70k) so moving to a cheaper property is not an option. Why is this being allowed to happen?

eggbox

yellowduck

Its down to a Department of Justice review that made changes to help creditors "keep faith" in the court system. But going for a CO does cost the creditor money so don't assume they will automatically go for one especially if you are up to date with your plan.

Can I just ask if you are a sole owner of the property?

yellowduck_2

eggbox wrote: »

yellowduck

Its down to a Department of Justice review that made changes to help creditors "keep faith" in the court system. But going for a CO does cost the creditor money so don't assume they will automatically go for one especially if you are up to date with your plan.

Can I just ask if you are a sole owner of the property?

my ex husband has a 35% share but he has never contributed to the mortgage and also paid no child support from the time our son was 3 until he became an adult, so in effect I have paid for everything including improvements to my property. I know that they can only put a charge on my 65%. I have no intention of moving as it not financially viable plus this is my home and I have worked to hard to buy it and make it a nice place to live in. I was aware of the Dept of Justice Review taking place but stupidly thought they would make it harder to obtain charging orders when the outstanding debt was relatively small. Surely given the current recession there are going to be more and more people in this situation with unsecured loans being converted into secured loans and more interest whacked on. Very worried,can see my debt growing each year as I understand that once a CO is in place they can add 8% interest. :eek:

eggbox

yellowduck

Well on this occasion you will be glad your ex has a share of the property because being a joint owner means your creditor can't get a CO on your land (property) only on your "Beneficial Interest" (your share of the equity in the property). As this thread explains, a CO on BI can only be registered as a "Restriction" on the Land Registry and carries no obligation of payment should you wish to sell your property (but be wary of Solicitors who aren't aware of the differences on CO's!)

Also, if your property is your main residence there is now case law that prevents a creditor obtaining an Order For Sale so you haven't any worries about having to sell. And the 8% interest you mention cannot be applied to CCA regulated loans (despite a lot of District Judges being unaware of this fact) so make sure you are armed with the correct information should it get to the CO stage.

A lot of creditors pursued CO's as insurance against the debtor going insolvent and to gain priority over other creditors. But having spent thousands on court fees many are seeing that they are not getting the returns they expected as people are not selling up and many people (this thread a major help) have learnt that a CO on jointly owned property is very weak security for the creditor.