Charging Orders Petition - Sign it NOW!

[sequenci]

A double-edged sword this one.

 

I appreciate that on occasion a Charging Order is an ideal method of enforcement, however, as stated the creditors are trying ot get these as a first resort. I must also state that the forthcoming Tribunals, Courts and Enforcement Act will make it easier for a creditor to get their charge since the need for a CCJ default will be removed.

[sequenci]

Also,I firmly believe that if the creditor has secured the monies borrowed,in return the interest rate of the original debt should be revised and reduced to reflect this.

there are plenty of legal arguments that can be used to prevent (contractual) interest being added to charging orders at all. have a look:

 

Interest on Charging Orders

 

Statutory Interest

 

Statutory interest would continue to run whether or not the order specifies it. The N86/87 forms allow ‘any interest’ to be included, this means statutory interest.

 

This doesn’t apply to Consumer Credit Act regulated debts or Charging Orders of debts below £5,000 unless they have been transferred to the High Court for a High Court Charging Order. (The County Court (Interest on Judgment Debts) Order 1991)

 

The judgment would carry statutory interest if it was made on or after July 1st 1991 and the judgment is for at least £5,000.

 

If a judgment has a payment ordered to be made on a specified date or by instalments, no interest will be payable either until that date or, on the amount of any instalment until it falls due.

 

If a judgement carries statutory interest, so will the Charging Order, even if not mentioned within the order itself. [Ezekiel v Orakpo]. S3(4) COA 1979 states that “A Charging Order shall have the like effect and be enforceable in the same courts and in the same manner as an equitable charge”

 

Contractual Interest

 

Many creditors are trying to argue that Charging Orders carry contractual interest after judgment even if the judgment itself doesn’t. There are plenty of arguments against this.

 

• Charging orders and their effect are determined by the Charging Order Act 1979

• Section 1 COA says that a Charging Order is made ‘for the purposes of enforcing that judgment or order’ and that the charge is for ‘securing the payment of any money due or to become due under a judgment or order’. Although enforcement of a Charging Order is not execution of a judgment, s1 means that the order and the judgment must be coextensive. Therefore no money can be recovered in excess of what is due or to become due under the judgment.

• Section 3(4) opens with the words ‘Subject to the provisions of this ACT…’ and so unless the interest is due under the judgment or order under the Interest on County Court Judgements Order, it cannot be included in the Charging Order

• The amount of interest depends on the amount of interest due on the judgment. Most CCA regulated agreement judgements do not have an interest post-judgment clause.

• Even if there is an interest post-judgement clause on a CCA regulated agreement the lender still cannot enforce these rights by levying contractual interest – unless that rate forms part of the judgment, the lender would have to bring seperated action for the interest. (Supreme Court Practice 1999 Ed. Para 42/1/24 and Re European Central Railway 1877 4 Ch.D.33

• The claimant may try to use s3(4) COA to claim that an equitable charge attracts interest on the principle sum. However, the rate of interest payable under an equitable charge depends on its terms. In the case of a CO, the judgment debt would be in essence the princinple sum. The rate payable on this sum is prescribed by statute or set out in the judgment. S3(4) wouldn’t justify applying a different rate.

[sequenci]

Claiming that the banks are abusing this is ridiculous.

i disagree, there is a great deal of abuse going on. I must stress that the majority of the abuse is usually from the DCAs rather than the banks, however.

If the debtor had not defaulted on repayment, the bank would never of obtained a Charging Order.

I think must people understand this.

The bank have to go to court 3 times before it ends in a Charging Order, for CCJ, for interim C/O and for final C/O. It is an expensive processs for them.

Actually, it's twice at a maximum. The interim is a paper exercise and more often than not so is the prelimary CCJ claim.

 

So would you say that the banks are not flouting The Banking Code? The OFT Guidance? The Overriding objective as per the Civil Procedure Rules?

[sequenci]

Nothing in the banking code about charging orders, how are they flouting it?

 

Not about Charging Orders specifically, more to do with helping debtors by being positive and sympathetic. Section 14 covers this:

 

http://www.bba.org.uk/content/1/c6/01/30/85/Banking_Code_2008.pdf

 

My argument is that on many an occasion a bank simply doesn't give the debtor a great deal of assistance and are quick to take further action / sell the debt on - which could *then* lead to further action i.e. a CO.

[sequenci]

The banking code has to work both ways though, how many debtors really contact their bank as soon as they know they are going to have difficulties paying?

 

Most that I speak to actually do. You seem to be quite defensive of the banks etc, what do you do for a living?

[sequenci]

I dont work in a bank.

i didn't suggest you did.

Most people that I speak to do not contact the bank as soon as they know they will have a problem and prefer to bury their head in the sand.

I advocate contacting a lender ASAP, in writing.

With regard to charges, what do you suggest they do?

follow the civil procedure rules and the oft debt collection guidance.

If they agreed to freeze charges and interest as soon as you phoned them up and said you were in difficulties, everyone would be phoning them up tomorrow.

i agree, there should be a process in place. *IF* someone is in genuine difficulty then they should complete a personal budget and make a reasonable offer. If the debtor cannot afford to pay a reasonable amount then certainly a charging order might be the best option for all parties. I don't think that it is fair for the creditor for a charge NOT to be made final IF a debtor has no reaslistic prospect of paying the debt back. I do think that the creditor needs to act in a reasonable and sympathetic way throughout the process though.

[sequenci]

Agreed.

 

And me too.

 

For the record I think a Charging Order is a VERY fair method of securing a debt for a creditor. Imagine if a debtor has a £20k debt and had little or no surplus income, it wouldn't be reasonable for them to accept a small token payment with no realistic prospect of the debt ever being repaid.

 

On the other hand the creditors need to start acting in a reasonable way by adhering to things such as the banking code and the oft guidelines on debt collection and only use court action as a last resort and when it is 'just' to do so.

 

It's a double edged sword.

 

To be honest many people seem really scared about these orders, they have positives too.

 

a) a creditor will usually stop chasing and making loads of calls once they have the protection of a CO

b) it is possible to have interest stopped on a CO

c) it is possible to make it a condition of a CO that an order for sale is not possible

 

+ many more I'm sure

[sequenci]

And Mr.Shed, it is also illegal for a bank to seek to recover credit where an account is in dispute due to incomplete or missing credit agreements, inacurrate default notices, failure to provide documentation, lack of proper assignment and so on.....but clearly you think thats ok.

 

would you mind showing me the statute or case law that backs this up? The creditor can take the action, it would be down to the debtor to raise these issues. The whole 'dispute' thing isn't law at all, it's just under s2.8k of The OFT Guidance as far as I was aware.

 

 

And you know what, I'm not sure I've ever heard of marriages breaking up, people becoming clincally depressed or someone commiting suicide because of the despair caused by penalty charges or PPI miselling. But it happens all the time becasue of the stress casued by debt and their treatment by a creditor or DCA.

 

This is more to do with malpractices employed by the debt collection industry rather than the utilisation of court court enforcement procedures. I think the whole industry needs to act in a more reasonable way, but it works both ways.

 

I fully appreciate that the UK debt collection industry is a shambolic affair with most firms involved causing a great deal of pain for thousands of people. Hopefully with the help of sites like this and other worthwhile organisations we can help educate people into what their rights are and how to go about enforcing them.

[sequenci]

Well maybe I am just showing my ignorance here but you read all over this forum about the 12+30 day thing for producing a CCA and a 'summary criminal offence' being committed.

 

Aha, I got you. I don't think the whole criminal offence thing is really bothered about, I'm sure that it is going to be removed by some European directive too.

 

Are you aware of the forthcoming changes regarding charging orders and the ease that the creditors will be able to get them? As things currently stand there needs to be a defaulted CCJ (or forthwith order) to allow the creditor to then go on and use enforcement. This is set to change, new legislation will allow a creditor to go for the charge even if there is no default on an instalment order on the CCJ. now THIS is scary.

 

Take a look:

 

Tribunals, Courts and Enforcement Act 2007 (c. 15) - Statute Law Database

 

For the record I think this is a very useful thread, I appreciate I have a tendancy to 'sit on the line' and hope my viewpoints are not in favour of either the debtor or creditor. I kinda like the role of devil's advocate.

[sequenci]

Should people also be warned about bankruptcy, bailifs and other debt recovery procedures before taking out a credit card?

 

I'm sure the application may refer to possible action if payments are breached.

[sequenci]

 

Once a property is tied up then no-one will receive anything other than the agreed payments set by the court. After all, a charging order, whilst it might turn an unsecured debt into a secured one, has little use apart from interest the creditor might accrue. Should the property owner be not intending to sell then it could be a high number of years before the charging order reaped any benefit. The likelihood of Sale of Property being enforced would still be a rarity in my opinion.

 

MANY creditors are now going for an Order for sale as a matter of course.

[sequenci]

 

If i stopped paying the creditor does this mean he would have to go back to court to seek a further order of some sought to get me to pay the money I owe?

 

Hello there,

 

If you default on the instalment payment the creditor would be able to excercise further enforcement; since you're no longer the owner of the property the creditor would opt for either:

 

a) A warrant of execution (Bailiffs)

b) An attachment of earnings (Payment from your wages)

c) Third Party Debt Order (a search to see if you have savingss etc and payment from those)

 

Currently, they cannot go for these as you are keeping up with the set payment.

 

Best wishes,

 

Seq.

[sequenci]

I'm sure that the terms & conditions of a financial agreement will state that legal action may be taken if a debtor breaches the agremeent which ends up with it being terminated. I actually think that a charging order is one of the better forms of enforcement providing they are used in a reasonable (and responsible) way.

 

What you should remember is that a charging order isn't securing a loan, it is securing a money judgment.

[sequenci]

The key issue here is that borrowers are not told that a lender can effectively turn an unsecured debt into a secured one.

 

It has little to do with the loan. The terms and conditions of the loan would have been terminated once the debtor defaults, this would mean that the creditor would have the ability to use the legal system to recover their money at this point. When it comes to the possibility of a charging order the loan would have been long gone, the situation is that there is a money judgment which the creditor has the right to use enforcmeent against.

 

Lenders charge higher interest rates on unsecured debt and are then able to convert it into a secured debt.

 

the debtor has the choice of having an unsecured loan or a secured loan if they shop about.

 

At the very least borrowers should be warned about this when signing new credit agreements.

 

they are warned that non-payment of an agreement could result in legal action.

[sequenci]

Some of them thought it was to do with the stability of the lender!

 

haha.

 

I hear what you are saying!

 

I think the new CCA 2006 rules go a little way towards clearing this up, perhaps clearing definitions within the credit agreements might be a way to ensure that the borrower is aware of the implications.

[sequenci]

I see two possibly equitable alternatives:-

 

* s69 interest of 8% simple from the date of the judgment (if included in the judgment)

 

Statutory interest cannot be added to CCA regulated debts.

 

* the interest rate adjusted to the rate of a secured loan, backdated to the start of the loan. After all, you paid the higher rate in return for the security (sic) of not having the debt secured against your home. You got the "peace of mind" until things went wrong but have ended up with the lower-priced, secured debt at the price of an unsecured debt.

 

Since Charging Orders are the creatures of statute there are plenty of arguments to stop interest being added whatsoever.

[sequenci]

Is a "money judgment" a CCA regulated debt?

 

A money judgment is a county court judgment for money, so it could be a CCA regulated debt for sure. The law is very clear that statutory interest cannot be claimed on a CCJ which has arisen from a CCA regulated agreement. Hope this makes sense!

[sequenci]

It does. Thanks.

 

I am still struggling to get my head around the distinction you drew previously "that a charging order isn't securing a loan, it is securing a money judgment"

 

When you take out a loan or a credit card you are signing to specific terms which are outlined within the credit agreement. Those terms state that you will pay a certain amount on a certain date. Providing you stick to those terms you will pay off the amount borrowed and there will be no further implications.

 

If you were to default on the agreement it would terminate, effectively the whole sum gets called in. With CCA regulated agreements this can only happen after a notice default has been served and breached by the debtor.

 

On termination, the monies that are outstanding are 'called in' and the whole amount becomes due. At this stage a creditor could use furtehr action to recover the sum due. There is no longer a 'loan' or whatever in place, it's just a sum of money so the whole turning an unsecured loan into one which is secured is an argument that (in my opinion) doesn't stand. The debtor breached the agreement so the creditor could use action to recover the money owing to them.

[sequenci]

Hi Sequenci, so does that also mean therefore that the creditor cannot charge statutory interest either. I have several debts and the creditor is charging interest on them at around 8% on a regular basis? Or does this only apply to the person who has been defaulted and claiming back charges?

 

many thanks,

 

magda

 

The creditor could choose to apply either contractual or statutory interest before court but only contractual (providing there is a contractual provision) once a judgment has been entered.

[sequenci]

Able to apply for a charging order without a CCJ in place.

 

there still needs to be a ccj in place, the law simply allows a creditor the right to apply for a charge even if there is a non-defaulted instalment order.

 

Able to add contractual interest AFTER judgment.

 

This has been allowed for about a decade.

[sequenci]

I know this is probably just aside but surely people should be just as concerned (if not more) about that the fact that the new bill will very likely give a bailiff the right to force entry for ccjs.

[sequenci]

If you take out an unsecured loan and then find that you default on the loan and they apply a term which is secured on your property, then it is not a unsecured loan and is in breach of some kind of consumer regulation.

Why is it?

It is a blatent misuse of legislation, you can not sell something that contradicts the law.

how does it?

the problem lies with the very people set up to police such contradictions, the OFT. They are useless, do they actualy prosecute anyone. the only reason they have a case in the high court regarding bank charges is because of media coverage of the issue. An inept bunch of early retirement seeking civil servants that do not serve the public, who pay their wages and over inflated pension claims. I see no difference from 2006 when they came to the conclusion that we were being riped off by the banks, nothing has changed in two and a half years, where is the policing, where is the protection from unscrupulouse business practices, there is none, what is the point of these very expensive bodies that do nothing.

 

When a debtor breaches an agreement it terminates. The whole sum would then be called in. The original terms of the loan are no longer valid. The lender has every right to use legal action although I agree it needs to be used in a reasonable way. Having said that I think Charging orders can be a reasonable option if applied in reasonable and proportionate way.

[sequenci]

what next charging orders for wheel clampers?

 

In theory you could have a charging order for certain traffic offences already.

[sequenci]

Magda, just as an aside. What do you recomend a creditor to do for debt enforcement rather than a charging order? What would be deemed as a reasonable option taking into consideration of a debtor's circumstances and their ability to repay the debt etc?