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Charging Orders - URGENT
saffronflowers
Posts: 859 Forumite
If this has been written about before apologies, but, I felt it was too important a peice of information not to post.
This is a peice of information I learnt at work (CAB) on Friday that I was unaware off.
A creditor can turn an unsecured loan into a secured loan through the use of a Charging Order. Though rarely used at the moment, it is becoming more used.
To explain this I have taken this from The Motley Fool website
It works like this: Once a creditor has secured a County Court Judgment against you, they can apply for a Charging Order as a means of enforcing the debt. At the moment creditors are not allowed to ask for a Charging Order if you have already agreed with the court to repay the debt by instalments and you are not in arrears, but the law is expected to change soon, enabling creditors to obtain an order even if you haven't fallen behind with your payments.
Nevertheless, if a Charging Order is granted the first thing that will happen is that a note will be entered on your property details at the Land Registry flagging up a restriction on your power to sell or remortgage the property.
If the creditor is then happy to sit back and wait for his money, nothing further will happen until you try to sell up, at which point any equity realised in the property will be used to pay back any loans secured against the property.
But, if the creditor wants his money immediately after acquiring a Charging Order, he can then apply to the court for an Order for Sale. If granted then the procedure works just as if you were having your home repossessed - the house will be sold, the creditor gets his money and you're homeless.
There's no guarantee that the court will grant an immediate Order for Sale -- occasionally the judge may think that, as the loan is secured against the property, the creditor can simply wait for his money, especially if you are then in a position to pay the money back in instalments. It would be more usual for you to be given some time to raise the money, perhaps by selling the property yourself rather than it being repossessed.
A Charging Order can be used against other assets too, not just your home. Any land or investments could be at risk too but the essence of a Charging Order is simply that a creditor can turn an unsecured debt into a secured debt.
Please be aware of this,
SFx
This is a peice of information I learnt at work (CAB) on Friday that I was unaware off.
A creditor can turn an unsecured loan into a secured loan through the use of a Charging Order. Though rarely used at the moment, it is becoming more used.
To explain this I have taken this from The Motley Fool website
It works like this: Once a creditor has secured a County Court Judgment against you, they can apply for a Charging Order as a means of enforcing the debt. At the moment creditors are not allowed to ask for a Charging Order if you have already agreed with the court to repay the debt by instalments and you are not in arrears, but the law is expected to change soon, enabling creditors to obtain an order even if you haven't fallen behind with your payments.
Nevertheless, if a Charging Order is granted the first thing that will happen is that a note will be entered on your property details at the Land Registry flagging up a restriction on your power to sell or remortgage the property.
If the creditor is then happy to sit back and wait for his money, nothing further will happen until you try to sell up, at which point any equity realised in the property will be used to pay back any loans secured against the property.
But, if the creditor wants his money immediately after acquiring a Charging Order, he can then apply to the court for an Order for Sale. If granted then the procedure works just as if you were having your home repossessed - the house will be sold, the creditor gets his money and you're homeless.
There's no guarantee that the court will grant an immediate Order for Sale -- occasionally the judge may think that, as the loan is secured against the property, the creditor can simply wait for his money, especially if you are then in a position to pay the money back in instalments. It would be more usual for you to be given some time to raise the money, perhaps by selling the property yourself rather than it being repossessed.
A Charging Order can be used against other assets too, not just your home. Any land or investments could be at risk too but the essence of a Charging Order is simply that a creditor can turn an unsecured debt into a secured debt.
Please be aware of this,
SFx
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