Charging Order Preference of Order?

[AnotherUserSeekingAdvice]

Hi

 

I have a legal charge of registered estate on my brothers house (only his name is on the deeds) and I have since found out that he owes large sums of money (unsecured loans) to 4 or 5 credit companies.

 

I am concerned as to just how safe my share of the property is. If any of his creditors put their own charge order on the house, does their order get paid before mine ? or is it on a first come, first served basis after the mortgage lender has received their share.

 

What happens if he declares himself bankrupt ?

 

Any advice much appreciated

[sequenci]

Hello there.

 

There is a pecking order based upon who registers their charge first.

 

If the other creditors are currently unsecured you would be paid prior to them.

 

Hope this helps!

[AnotherUserSeekingAdvice]

Hi

 

I have a legal charge of registered estate on my brothers house (only his name is on the deeds) and I have since found out that he owes large sums of money (unsecured loans) to 4 or 5 credit companies.

 

I am concerned as to just how safe my share of the property is. If any of his creditors put their own charge order on the house, does their order get paid before mine ? or is it on a first come, first served basis after the mortgage lender has received their share.

 

What happens if he declares himself bankrupt ?

 

Any advice much appreciated

 

Thanks for the info. Just want to clarify that a pecking order exists whether or not my brother declares himself bankrupt? All his creditors are unsecured, but Ive heard that once a debt agreement is cancelled due to lack of payments, the money owed can be turned into a secured one in the form of a charging order on the property, if thats the case, would a pecking order continue to exist ?

[sequenci]

Thanks for the info. Just want to clarify that a pecking order exists whether or not my brother declares himself bankrupt? All his creditors are unsecured, but Ive heard that once a debt agreement is cancelled due to lack of payments, the money owed can be turned into a secured one in the form of a charging order on the property, if thats the case, would a pecking order continue to exist ?

 

it can be turned into a secured debt. the creditor would need to issue court proceedings to obtain a CCJ, they would then need to issue more proceedings to apply for a charging order. the process can take a good 6 months. the pecking order would be the same if he was to go bankrupt. is there equity in the property and how long have you had the charge?

[AnotherUserSeekingAdvice]

it can be turned into a secured debt. the creditor would need to issue court proceedings to obtain a CCJ, they would then need to issue more proceedings to apply for a charging order. the process can take a good 6 months. the pecking order would be the same if he was to go bankrupt. is there equity in the property and how long have you had the charge?

 

The house is a small terraced worth 70K. My brothers mortgage is 55K. My share is a minimum value of 17K or 25% whichever is the greater at the time of sale. Looking at the figures, its safe to say that what equity in the property wont even pay my 17K minimum which was agreed when the charging order was made. Ive had the charging order for 2.5 years. The agreement I made was that my brother could not borrow any loans secured on the property that would jeopardise my 25%, which he has adhered to as all is debt was taken out unsecured.

 

I guess in the event of a sale, the mortgage gets paid off in full then whats left goes down the pecking order.

[sequenci]

 

I guess in the event of a sale, the mortgage gets paid off in full then whats left goes down the pecking order.

 

Absolutely. You're the second charge holder so would be paid after the mortgage.

 

I really must add that I'm not sure Bankruptcy is the right option for your brother as it could really implicate you. Since the charge was made within the last 5 years and you're related it may be viewed by an Official Receiver as a pre-bankruptcy irregularity or even a pre-bankruptcy offence. I strongly suggest that he gets some impartial debt advice from one of the debt-advice charities.

[AnotherUserSeekingAdvice]

The charging order was put on the property by means of inheritance, and I have the death certificate to prove it all happened within months of the passing of my mother, as well as solicitor documentation.

 

I will be speaking with my brother again to see what advice he has been given.

 

Thanks again and have a great weekend

[sequenci]

The charging order was put on the property by means of inheritance, and I have the death certificate to prove it all happened within months of the passing of my mother, as well as solicitor documentation.

 

aha... the previous note about implications with bankruptcy are not relevent then. Hope that clears things up.

[AnotherUserSeekingAdvice]

Yes thanks, that clears everything up.

 

Many thanks for all your help.

[Andy h]

It took for me 3 months from CCJ to charging order and the judges are very willing to grant them.

[AnotherUserSeekingAdvice]

Hi again

 

I just wanted to update this thread a little.

 

My brother has received a letter from the Land Registry 'B132 Notice to a registered proprietor of an application to enter an agreed notice'

 

The application was lodged by his creditors solicitor company.

 

On the letter it says:

 

"As a result of this application the following entry has been made in the Charges Register of the above title number"

 

"Equitable charge created by an interim charging order of the Gateshead County Court dated 1 August 2009 in favour of "

 

As far as I am aware, my brother has not yet filed for bankruptcy. Im assuming that this recent charging order goes 3rd in line after my own charging order as per our previous discussions in this thread (the pecking order) ?

 

In the event of a sale of the property, once the mortgage has been paid off in full, Im next in line, and therefore I would receive 100% of my entitlement or would the remaining equity be split a certain % between each individual who has a charging order on the property ?

[AnotherUserSeekingAdvice]

Here is another update:

 

 

Ive been sent notification from his creditors solicitors, who have said that I dont need to respond to their letter unless I intend of going to the hearing.

 

I understand my brother can object to the 2nd charge being made and perhaps I could also if I felt the charge would put my interest at a disadvantage.

 

However, there isnt enough equity in the property to cover my charging order let alone further orders.

 

Current house value = 70K. Mortgage gets paid off first (55K) = 15K

Im left with a 2K short fall.

 

What would happen if my brother declared himself bankrupt -

Would the official receiver would take the property as an asset, and any equity would then be shared fairly amongst creditors?

 

My question is, just how fairly would the equity get shared ?

 

Im owed 17K, one of his creditors is owed 11K and another creditor is owed 1.4K (but the 3rd creditor hasnt got as far as putting an interim charge on the property, yet - they could do in due course, only time will tell)

 

Would the distribution be as a proportionate % or split 50/50, ie. myself and the 2nd creditor get 7.5K each ?

 

If, the outcome at the court hearing was that the charge isnt granted, could his creditor force him to go bankrupt ? If so, how would my charging order be affected ?

 

Can my brother object to the Interim Charge Order that his creditor has placed with the land registry, by calling the lang registry and simply stating the reasons why he objects ?

 

Will the interim charge order prevent sale of the property before the court hearing ?

 

Any advice much appreciated as Im really at loose ends with all this. The stress its causing to me and my partner is getting unbearable.