Thread: A question about charging orders

Hi, I was wondering if someone can answer a question for me;

If a lender succeeds in getting a CCJ for an unsecured debts, and later succeeds in getting a charging order, what happens if the debtor declares bankruptcy?

My understanding is that bankruptcy "settles" and CCJ's, and if this is the case, would the charging order then not apply, or is it a case that the charging order makes the debt secured, and therefore outside of the bankruptcy

Originally Posted by Cyberdad

or is it a case that the charging order makes the debt secured, and therefore outside of the bankruptcy

Yup.

Once secured it wouldn't 'prove' within the bankruptcy.

Is the house in negative equity?

Originally Posted by sequenci

Yup.

Once secured it wouldn't 'prove' within the bankruptcy.

Is the house in negative equity?

It is theoretical at the moment, just trying to explore possibilities which may be necessary in the future and trying to judge how hard to fight any attempts at charging orders that may arise.

Would it make a difference if in negative equity apart from being able to buy the beneficial interest off the OR

Originally Posted by Cyberdad

Would it make a difference if in negative equity apart from being able to buy the beneficial interest off the OR

No, it's just that really. A Charging Order will really eat into equity and often push people into negative. They are notoriously difficult things to prevent although this forum is a great place for help & guidance.

Thanks sequenci. Am I right in thinking that a charging order can't be obtained if the CCJ payments are maintained in line with the judgement. Thanks

Originally Posted by Cyberdad

Am I right in thinking that a charging order can't be obtained if the CCJ payments are maintained in line with the judgement. Thanks

100% Correct.

Section 86(1) The County Courts Act 1984:

' Where the court has made an order for payment of any sum of money by instalments, execution on the order shall not be issued until after default in payment of some instalment according to the order. '

This was further considered in the case of Mercantile Credit V Ellis in The Court of Appeal 1987. It was found that the wording of the Charging Orders Act states quite clearly that no further action could be taken without a default in payment. It should be noted, however, that in the case of Ropaigealach V Allied Irish Bank CA Nov 2001 where an instalment order is made AFTER an interim charging order has been made, a court has the jurisdiction to make a Charging Order final.

There are various tactics which a creditor will use to try and obtain the Interim Order, they will try their best not to allow the court grant an instalment order on a CCJ. If a debtor wishes to admit the claim and request instalments, the creditor may argue the instalments are unacceptable and that a Charging Order is more appropriate. A creditor might also seek a re-determination if a court accepts a debtor’s offer of instalments. Some creditors have even been known to ask a district judge to consider a Time Order to change the judgment to forthwith.

Hope this helps!

Thanks for that Sequenci.

I am right at the start of the process at the moment. An income drop of 75% due to credit crunch means I am making token payments only to a number of creditors (mortgage & sec. loan up to date). Total unsecured is around £115K so bankruptcy has to be considered as an option, although the main drawback would be I can no continue in my occupation.

Currently, I have RBS taking action (separate thread in legal issues) and we have reached the aq stage. It would be my intention to try and defend any action as it would seem I have little to lose by doing so, and much to gain.

MBNA sent a threat-o-gram yesterday entitled "Potential Court Order on your Home", and whilst I know it is just an attempt at putting the frighteners on, it got me thinking.

In the case of a defended action where the claimant succeeds, would the court consider an application to pay by installments at the time of making the judgement, or would that come later? and would the claimant be able to ask for a "forthwith" judgement and charging order right away? - Sorry for so many questions.