Author Topic: charging orders - can someone give me advice please  (Read 3515 times)

reallyfedup

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charging orders - can someone give me advice please
« on: Oct 20, 2010, 02:39:05 PM »
Hi, not sure if I am leaving this question in the right section?

Anyway: we have a mortgage of 310,000 and a 2nd mortgage of 90,000. This was taken out before the house prices dropped drastically. The house is now probably worth c350,000. so we are in negative equity. This is ok as we love our house and plan to stay here for many years.
However, we recently were unable to maintain our payments against our unsecured debts (mortgages have always been paid on time etc) due to personal circumstances & illness. We entered into a DMP and have been paying all creditors a monthly payment which we have never missed and this has been going on for nearly 4 years now. Our personal circumstances have got better over the years so we have been able to increase the amount we pay every month, each year of the 4 years. 3 of our creditors have recently applied for CCJs and also charging orders against us. These have all been agreed by the court. Another creditor has also just obtained a ccj and is now also applying for a charging order. the mortgage, 2nd mortgage & now 4 charging orders mean that we are in negative equity of c150,000 which would mean that we would have to sell the house for 500,000 in order to pay everyone (not including solicitors & stamp duty etc). my question is: if we have paid & are continuing to pay a monthly payment to all our creditors, without ever missing a payment etc, why are these charging orders being allowed. What would happen in the event of us having to sell the house and then not having enough equity to pay everyone with a charging order? what happens then?

Steven Jackson

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Re: charging orders - can someone give me advice please
« Reply #1 on: Oct 20, 2010, 03:03:20 PM »
Hi there reallyfedup.
 
A charging order can only be applied for if you have received a CCJ which you have not paid. Generally CCJs demand that the debt is paid back in full or in installments. I can only assume that the CCJs you received were demandng a lump sum which you clearly could not afford to pay.
 
When you originally received notice of the CCJ application, did you complete the admission form stating your income and expenditure and what you could afford to pay each month? Generally speaking if you did this, then the terms of the CCJ would be based around a monthly payment. If you then made the payments as ordered, a charging order could not then be applied for.
 
In terms of selling your house, the creditors who have charging orders may try to block this if they are not going to get paid in full. As such, you really have two options. Either wait it out until house prices recover or argue with the creditors that unless thay allow the sale, you will simply stop paying the primary mortgage and allow the house to be repossessed. That way, they are likely to receive even less of their money.
 
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reallyfedup

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Re: charging orders - can someone give me advice please
« Reply #2 on: Oct 20, 2010, 03:29:39 PM »
Hi there reallyfedup.
 
Thanks for your reply.

Firstly, we were just sent the details of the ccj hearing. we weren't given an opportunity to fill out an income form etc. my husbnad attended the hearing and the solicitors said that the installments that we are currently paying would be accepted once the charging order had been agreed. The charging order hearing is next month. They have in the meantime rejected the offer that we have been paying for the last 4 years! We have paid back nearly £8000 of a £46000 loan & still owe £44000!

We dont intend to sell the house as this is our final home that we have always saved for and we are very happy here & the mortgage is fine etc. all our debt (excluding mortgage) should be paid off in 10 years maximum anyway but I am not sure why they are going down the route of a charging order when we have absolutely no hope of the house ever being worth that much to cover the mortgage & all the charging orders. is it just standard practice?

Steven Jackson

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Re: charging orders - can someone give me advice please
« Reply #3 on: Oct 20, 2010, 03:39:10 PM »
No problem at all reallyfedup
 
Unfortunately, it is becoming more and more standard for creditors to secure their debt with a charging order. This is to protect against the risk of them loosing out if the debtor does down an IVA or bankruptcy route. In general they are not able to do this until a CCJ has been first issued and then the terms of payment not strictly adheared to. As such they can not just automatically apply for a charging order.
 
As you say, if you do not intend to sell the house and just want to keep on making your repayments, then really there is no advantage for the creditors in taking out a charging order. They can not force you to sell without a further court order which they are unlikely to get. Eventually the debts will be paid. The creditors are really just protecting their position.
 
Bear in mind though that they are allowed to add interest to the debt at the statutory level of 8% pa which they will almost certainly do.
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reallyfedup

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Re: charging orders - can someone give me advice please
« Reply #4 on: Oct 20, 2010, 05:00:04 PM »
We have been advised that the creditors that have charging orders have frozen all interest charges from the date of the CCj etc. if however, they did add on interest at this rate then we would never be able to pay it off. that would be a really negative thing to do wouldn't it?

Steven Jackson

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Re: charging orders - can someone give me advice please
« Reply #5 on: Oct 21, 2010, 04:18:40 PM »
Hi reallyfedup
 
If you have been told by the creditors that they are not adding any further interest or charges to your accounts then I am sure this is the case. It is just worth bearing in mind that legally, the creditors have the right to charge interest at 8% if they wish. This is basically the incentive for the debtor to pay off the debt rather then simply leaving it unpaid until the property is sold which may not be for many years.
 
My advice is regularly ask the creditors for an account balance - say ever 3-6 months. Then you will be able to compare what you think you have paid to what they think the balance is and see whether there are truely no charges being added or not.
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James Falla

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Re: charging orders - can someone give me advice please
« Reply #6 on: Oct 21, 2010, 04:25:27 PM »
I would wholeheartedly agree with Steve on this one. If you are regularly making payments towards a debt with a charging order, it is really important to periodically request a blance of account so you can track what you have paid, what if any charges are being added and exactly what the creditor thinks you owe. This way you are more in control and there will be no nasty surprises.
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madison85

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Re: charging orders - can someone give me advice please
« Reply #7 on: Oct 27, 2010, 08:31:57 PM »
Reading all this what I advice is directly meet with Steven Jackson with all your papers, He is a good adviser I think in this regards. And wish you all the best and good luck.

Steven Jackson

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Re: charging orders - can someone give me advice please
« Reply #8 on: Oct 28, 2010, 03:21:27 PM »
Many thanks for your support madison85
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