Debt, Charging Order but no mortgage.

terryw

Any suggestions or help for a friend of mine. (Not me honestly!)

My friend and his wife paid off their mortgage some eight years ago. The home is jointly owned with a value of about £130,000. He set up a business two years ago and this has been an unmitigated disaster. He borrowed money and lived off credit cards during this two years and now has about £60,000 of unsecured debt. Court Summons have been issued by two of the creditors and others are likely to follow. They are living on £100 per week JSA and have no assets other than the house. They are both in their fifties and, whilst they have applied for hundreds of jobs, employment prospects look very bleak indeed. Offers to pay at £10 per month have been refused and it looks as though the two creditors are going to apply for charging orders.

Providing they pay the monthly amount ordered by the court, can a charging order be enforced so that the home is sold, or must a bankruptcy petition be issued by the creditors before this can happen? Do the credit card companies actually go for bankruptcy in these cirumstances?

Thanks in advance for any ideas or suggestions.

sieve

Charging orders do not require a bankruptcy. Can't they just remortgage or move to a cheaper house to free up some equity? They do after all have £130k of realisable funds at the end of the day, so creditors are not going to look on them favourably if they don't get paid...

terryw

sieve wrote: »

Charging orders do not require a bankruptcy. Can't they just remortgage or move to a cheaper house to free up some equity? They do after all have £130k of realisable funds at the end of the day, so creditors are not going to look on them favourably if they don't get paid...

. It is just not possible to get a re-mortgage because because of the of the lack of employment and the poor credit history with the CCJs They have the house up for sale but there are ten others on the same small estate which have not sold in the past two years...they have priced the house £10000 below the cheapest of these.

Surely though, a charging order merely ensures that the creditor is paid when the house is eventually sold. Can a charging order force a house to be sold, or must this come through bankruptcy?

debt_doctor

Hi,
A creditor who holds a charging order can apply to the court for an order for sale, the application will then be decided by a district judge. Orders for sale are rare, but have increased in number over the last couple of years.

Usually the charge will sit there posiibly attracting statutory interest at 8% or contractual interest if the agreement / court allows, until the owner sells the house.

DD

SouthCoast

they have priced the house £10000 below the cheapest of these.

Good quality properties, realistically priced are finding buyers.

maxmycardagain

SouthCoast wrote: »

Good quality properties, realistically priced are finding buyers.

a mate was living in a semi, next door lived his brother, both put them up for sale and both got the asking prices - (£145k) - inside 3 months.

maxmycardagain

terryw wrote: »

. It is just not possible to get a re-mortgage because because of the of the lack of employment and the poor credit history with the CCJs They have the house up for sale but there are ten others on the same small estate which have not sold in the past two years...they have priced the house £10000 below the cheapest of these.

Surely though, a charging order merely ensures that the creditor is paid when the house is eventually sold. Can a charging order force a house to be sold, or must this come through bankruptcy?

turn it around

you supplied the guy with goods or credit and he cant pay you, if you knew he owned the property with no mortgage would you be happy to let the CO sit idle?...

i wouldnt

terryw

maxmycardagain wrote: »

turn it around

you supplied the guy with goods or credit and he cant pay you, if you knew he owned the property with no mortgage would you be happy to let the CO sit idle?...

i wouldnt

I agree with you 100 per cent. I have suggested to my friend and his wife that the sale of the house is the best way forward. At least, they are in control of the situation rather than a forced sale by a court which could be by auction. However, my friend and his wife are like Mr Micawber, and keep thinking that something will turn up.
My main purpose in putting this thread on MSE is to show them that choices now are very limited.

CCCS_Matthew

Hi there.

What are the exact ages of your friends? If they are over 55 the only other option that springs to mind would be to see whether they qualify for equity release. If this was possible they could perhaps release enough equity to clear the debts and still stay in the house. The main disavantage is that if they do decide to sell at any later stage the equity release company would take the agreed share of the money.

I would strongly advise they get proper advice before considering this, and without seeing a full breakdown of their finances I couldn't even say whether it could be done. They are more than welcome to have an appointment with ourselves to see what options they have - 0800 138 1111.

The other advice on the thread so far has been good. If a charging order is granted it may not force the sale of the house, however the creditor may be more inclined to go down this route if no monthly payment is being made. As Debt Doctor has said, the longer any debt remains on the equity the more equity it can eat up if no payment is being made due to the 8% statutory interest.