Charging Orders

davek1

Hi all.

Is it my imagination or are creditors moving more readily to charging orders? My personal experience is yes. Also reading the threads on here over the last few days it seems that more and more creditors are moving towards charging orders. the courts seem to be granting them almost without question.

This is not just the case with non paid debts but even with those being paid via DMP's. It is also for what could be termed small amounts one of my personal examples is for £1,100.

Whilst the creditors should take steps to recover their money. It seems to me that to turn unsecured debts into secured ones is going to push already hard pressed debtor into more debt and in negative equity or be at risk of repossession.

Not really an issue to discuss more a curiosity of mine and interested to see others coments.

Dave

penguin83

I have just done a mini study in work (county court) and so far since jan 2007 we have had a 66% increase in the amount we issue (roughly 40 a month). They are definately on the increase. x

davek1

i thought that would be the case. Not sure how much further it takes a creditor when there is negative equity mutiple charges and creditor paying minimal amounts. Even if sale is forced then still no money left

Tootsie_Roll

davek1 wrote: »

Hi all.

Is it my imagination or are creditors moving more readily to charging orders? My personal experience is yes. Also reading the threads on here over the last few days it seems that more and more creditors are moving towards charging orders. the courts seem to be granting them almost without question.

This is not just the case with non paid debts but even with those being paid via DMP's. It is also for what could be termed small amounts one of my personal examples is for £1,100.

Whilst the creditors should take steps to recover their money. It seems to me that to turn unsecured debts into secured ones is going to push already hard pressed debtor into more debt and in negative equity or be at risk of repossession.

Not really an issue to discuss more a curiosity of mine and interested to see others coments.

Dave

To be honest it's no real surprise with the number bankruptcies and IVA's on the increase due to the relaxed legislation. Lenders are looking to secure their debt and ensure payment rather than just be one of potentially dozens and have to take a hit on their expected income.

The courts are obliged to grant them if all documentation is in order. Many people (inculding me) don't view their home as a financial asset and often don't consider any equity they may have when it comes to repaying debts. The courts on the other hand are obliged to take ALL assets into account inculding any equity so the judge has no choice but to grant the order. I have not heard of any successful appeal on the basis of putting one creditor in front of another.

I don't really see how this is going to make the situation any worse than it already is, as you claim. The debt is already owed, you can still repay it on a DMP. The chances of you losing your home due to the charging order are very slim indeed if you continue with the agreed repayments and negative equity doesn't even come into it.

davek1

Tootsie

How does securin a debt make a difference to bankruptcy or IVA? to my knowledge it doesn't.

How is a house with negative equity an asset? surely it's a mill stone. Of course negative equity comes into it. If the debtor sells the house the money from the sale will first got to the mortgage lender to cover outstanding mortgage, second loan etc. There comes a point when adding charges achieve nothing.

Of course you can oppose a charging order, as you can oppose any proceedings. A judge is NOT bound to award a charge it is a decision for him to make based on each individual case. Giving precedence over other creditors is a standard defence to this .

I believe it is yet another tactic of creditors and in particular debt recovery companies to flex their muscle. additionally you are adding to the debt by way of court costs so the prospect of repayment becomes an even longer term problem. I have seen this personally for relatively small debts. I trully believe that the government needs to look at this aspect. a better route would be a charging order to remain until sale or remortgage without repayment, or with minimal repayment. Of course statutory interest could be added but the creditor would be assured of getting their money in the longer term.

Lets be clear though the courts are NOT obliged to agree charging orders and often don't.

Tootsie_Roll

davek1 wrote: »

Tootsie

How does securin a debt make a difference to bankruptcy or IVA? to my knowledge it doesn't.

How is a house with negative equity an asset? surely it's a mill stone. Of course negative equity comes into it. If the debtor sells the house the money from the sale will first got to the mortgage lender to cover outstanding mortgage, second loan etc. There comes a point when adding charges achieve nothing.

Of course you can oppose a charging order, as you can oppose any proceedings. A judge is NOT bound to award a charge it is a decision for him to make based on each individual case. Giving precedence over other creditors is a standard defence to this .

I believe it is yet another tactic of creditors and in particular debt recovery companies to flex their muscle. additionally you are adding to the debt by way of court costs so the prospect of repayment becomes an even longer term problem. I have seen this personally for relatively small debts. I trully believe that the government needs to look at this aspect. a better route would be a charging order to remain until sale or remortgage without repayment, or with minimal repayment. Of course statutory interest could be added but the creditor would be assured of getting their money in the longer term.

Lets be clear though the courts are NOT obliged to agree charging orders and often don't.

To cover your points one at a time:

Securing the debts makes a masssive difference to the lender if the debtor later becomes bankrupt or enters an IVA simply because they are assured of receiving the full balance back (that they have secured) rather than just a percentage in the pound. That may be to the detriment of another creditor who hasn't gone to the trouble of obtaining a charge but that was their choice.

Negative equity simply doesn't apply to a charge listed on the property in this way. The debtor could still sell their home for the current market value and if there were insufficient funds to clear the additional charge then that would be bad luck for the creditor who would then be back to the same unsecured debt situation, I agree in this situation it achieves nothing. This is entirely different from real 'negative equity' where there are insufficient funds to clear the mortgage charges on the property and the house cannot be sold (under normal circumstances). Also your assertion that it pushes people into more debt is largely inaccurate as the debt is already owed. I think it's just your terminology that is confusing things here, you are calling it 'negative equity' simply because the potential amount of debt secured on the property exceeds the value which is not the same.

Of course you can oppose a charging order and the judge isn't 'bound' as you put it to award one - I simply stated that if the paperwork was all correct and in order the judge was obliged to award it. Perhpas I should have added that was unless a suitable defence was made and there aren't many of those. Giving one creditor preference over another isn't a suitable defence as I stated. As I did mention though the judge is obliged to take all financial assets into consideration including equity. So in summary: correct paperwork, no suitable defence = charging order.

Your penultimate paragraph is exactly how it works right now. How else do you think the goverment should intervene ?

Your final paragraph is inaccurate as stated above; the court has to award the order(subject to above) and in most cases do.

davek1

tootsie

which bit of the court doesn't have to award an order do you not understand. It is a decision for a judge based on each individual circumstances. AND no they dont always make the order i can tell you that from first hand experience and yes placing one creditor at a greater advantage over another is an argument to stopping the charge. Go check your facts, go check the guidance issued by the lord chancellors department.

Of course forgot you worked for DCA so you would take the view you have.

Tootsie_Roll

davek1 wrote: »

tootsie

which bit of the court doesn't have to award an order do you not understand. It is a decision for a judge based on each individual circumstances. AND no they dont always make the order i can tell you that from first hand experience and yes placing one creditor at a greater advantage over another is an argument to stopping the charge. Go check your facts, go check the guidance issued by the lord chancellors department.

Of course forgot you worked for DCA so you would take the view you have.

:rotfl: :rotfl: :rotfl:

You carry on living in your bubble - I will continue to live in the real world. It might help if you could string a proper sentence together - can someone translate this for me please; 'which bit of the court doesn't have to award an order do you not understand'. Sentences and names always start with a capital letter .

I'm not really sure why you've suddenly got so hostile. Of course I've only experienced it hundreds of times - I bow to your superior knowledge :rolleyes: . I see some of the usual suspects have turned up to support their right on brother. As I've mentioned before, its like the blind leading the blind.

penguin83

Just sitting on the fence here with regards to whether Charging Orders are right or wrong, in my experience most charging orders are made final. Once the Interim has been granted, and all interested parties served we do get some defended but the judge tends to grant the Final Charging Order and then make an additional order that the Charging Order is not to be enforced so long as the defendant makes specified payments.

We had 20 listed today and out of these 16 were made final and 4 discharged.

However I do agree it does seem unfair to give one creditor advantage over another.

craftingqueen_2

Hi penguin83,

we have big debts,do you know how many charging orders can be put on our house.

cq

zoe1982

hi davek

Im sorry its very early so what i am about to write is probably complete drivell (and has probably been covered by other people) but still wanted to write this incase its any use to you - are the companies going for a charging order for debt amounts that are in a DMP???????? If so what do your DMP people have to say about it, I recently spoke to someone about getting one myself and he said that although you dont go onto the insolvency register as you do in an IVA they work very similiar. The company may not want to accept your offer of payment but they actually have to so cant see how they can then proceed with further debt recovery action.A lot of companies are opting for charging orders as even though it is a drawn out buiness getting it through the court they see it as a practically assured way ofgetting their money back.............however.............I cant see how they can do this with negative equity as if they dont get any funds out of the sale they will just end up with even morte charges. Have you looked into this on court websites (prbably a stupid question I know) - you may be able to gather some more info from there, this may also aid you in submitting a defence against the order. The only other thing I would suggest to you is approach the company once more about setting a realistic payment arrangement as if they are recieveing payments they wont go down this route (and am sure that they cant do this if regular payments are being made) zoe x