wycombe V Restons (MBNA)

[Gallahad]

This may explain.

 

Charging order The myth

I feel that this is so important that I thought a new thread should be made to highlight the importance of understanding the law on Charging Orders and how many people are stuck with their property in the false believe that they have had a Charging Order put on their property.

 

In particular the thousands of Northern Rock customers that have had unsecured debt turned into secured debt by their tactics.

 

If your property is jointly owned a creditor will not be able to obtain a CO against you, they can only get what is called a restriction.

 

The laws on Restrictions are totally different to Orders, the most important being there is NO OBLIGATION for you to pay any of the proceeds of the sale to the creditor.

 

However, during the whole court process you go through the reference from all parties (especially the creditor) will be to charging order and NOT to restriction. This is done in order to decieve you believing you are stuck with a CO.

 

However, not all solicitors are aware of the law in this regard and it is important that you raise this point with them in the first instance before proceeding with them

 

Quote:

 

Restriction

 

 

The restriction which can be entered on the register where a charging order is made against one of joint proprietors is in the following form :-

No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of [an interim] [a final] charging order on the beneficial interest of (name of judgment debtor) made by the (name of court) on (date) (Court reference.…).

You are therefore correct in saying that when the Land Registry receives an application to register, for example a transfer, we will not ask to see the consent of the person who has the benefit of the charging order. We will only want a certificate from the applicant for registration or his conveyancer that the person who has the benefit of the charging order has been given written notice of the transfer.

 

If both joint owners sell the land to a third party the restriction will be cancelled when the transfer to the purchasers is registered.

[Gallahad]

This may explain.

 

Charging order The myth

I feel that this is so important that I thought a new thread should be made to highlight the importance of understanding the law on Charging Orders and how many people are stuck with their property in the false believe that they have had a Charging Order put on their property.

 

In particular the thousands of Northern Rock customers that have had unsecured debt turned into secured debt by their tactics.

 

If your property is jointly owned a creditor will not be able to obtain a CO against you, they can only get what is called a restriction.

 

The laws on Restrictions are totally different to Orders, the most important being there is NO OBLIGATION for you to pay any of the proceeds of the sale to the creditor.

 

However, during the whole court process you go through the reference from all parties (especially the creditor) will be to charging order and NOT to restriction. This is done in order to decieve you believing you are stuck with a CO.

 

However, not all solicitors are aware of the law in this regard and it is important that you raise this point with them in the first instance before proceeding with them

 

Quote:

 

Restriction

 

 

The restriction which can be entered on the register where a charging order is made against one of joint proprietors is in the following form :-

No disposition of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to [name of person with the benefit of the charging order] at [address for service], being the person with the benefit of [an interim] [a final] charging order on the beneficial interest of (name of judgment debtor) made by the (name of court) on (date) (Court reference.…).

You are therefore correct in saying that when the Land Registry receives an application to register, for example a transfer, we will not ask to see the consent of the person who has the benefit of the charging order. We will only want a certificate from the applicant for registration or his conveyancer that the person who has the benefit of the charging order has been given written notice of the transfer.

 

If both joint owners sell the land to a third party the restriction will be cancelled when the transfer to the purchasers is registered.

[Chipmeister]

So, if the restriction is then cancelled once a property is sold what does the creditor do then as their charging order is effectively worthless??? Can they CCJ and start the whole process again on the same debt?

[Gallahad]

It does not negate the debt but severely limits what the creditor is able to do to force payment

G

[Chipmeister]

It does not negate the debt but severely limits what the creditor is able to do to force payment

G

 

Could the creditor look to bankrupt someone in that position? I guess what I'm getting at is can the creditor have "another bite of the cherry" and start another route to collect that particular debt - double jeopady, if you will!

[Gallahad]

You have to view a CO as the creditors means of securing the debt and nothing else so that all options he had for collection remain as they were. I know this may not be what you wanted to hear but hope it clarifies.

G

[Chipmeister]

You have to view a CO as the creditors means of securing the debt and nothing else so that all options he had for collection remain as they were. I know this may not be what you wanted to hear but hope it clarifies.

G

 

Thanks for the reply and clarification - thought that would be the case. Always best to know the facts about these things!

[diddydicky]

Firstly- a creditor with security (as would be the case if a charging order was made) cannot serve a SD

 

secondly- i feel that you are getting the charging order matter a little confused

 

where there are joint owners of a property the court will make a charging order against the person mentioned in the proceedings against THEIR SHARE of the property

 

typically this will be man and wife- and the effect of the charging order will (IMO) be to prevent the owners of the property from selling the property and pocketing the funds without payment to the holder of the charging order

 

the reason for this is because the BUYERS SOLICITORS will be aware of the charging order, as well as any other mortgages or second charges on the property and will advise their client NOT to proceed with the purchase unless the sellers solicitors undertake to clear all mortgages, charges and charging orders from the proceeds of the sale.

[wycombe]

I have been offline for a bit so am just catching up with all the responses. My thanks to all those who have added their comments. It has given me food for thought and a little optimism as the last thing I want to happen is for my wife to find herself homeless due to my borrowing mistakes and the do-do I am up to my neck in caused by my illness (and failure to recognise I would not be able to cope with my level of debt in the case of an emergency such as the one that caused my defaults.)

 

It looks as if I will not be able to prevent the Charging Order - but so long as Reston's cannot force the sale of the house I am not too concerned by this. What is important to me is the Court fixing the amount I need to pay MBNA/Reston's so I can get my finances on an even keel and then get back into work again and start the slow process of paying off my creditors. If I am able to re-activate my company I hope, within a year of two, to make a substantial dent in what I owe.

 

With regard to the property transfer - this was done at a solicitors. It is the mortgage holder who has failed so far to return the documentation back to the solicitors so the change could be registered with the Land Registry. As has been stated this would look like a 'device' to avoid the CO now - despite it being done to protect my wife in the event I pegged out whilst in hospital - which was a very strong possibility.

 

Thus my understanding is - Restons get the CO but cannot force the sale of the property and cannot do anything further if I maintain the payments as stipulated by the Court. Am I correct in this or deluding myself?

 

I am currently in the process of getting back on my feet again - but I now have a CCJ registered against me. Does anyone know if I can open a basic bank account in my Company name and another in my own name? In order to get my business going again I am going to need banking facilities. Without these I will not be able to get off the ground.

 

Again all thought and comments most welcome.

[foolishgirl]

IMO I would fight a CO to the wire wycombe as you may need the security of your property with any sort of credit you might want in your prospective business.

 

Check with the Land Registry who has the title - your wife or both of you. You can do it online, I think it costs £12.00. If the house has been registered in your wife's name, Restons cannot obtain a CO.

 

Your arguments against the CO should be that (a) it would prejudice other creditors & (b) that you have not been given the opportunity to demonstrate that you can maintain regular payments as ordered by a court & that you intend to increase those payments as soon as your income permits.

 

Restons get the CO but cannot force the sale of the property and cannot do anything further if I maintain the payments as stipulated by the Court. Am I correct in this or deluding myself?

Correct

 

Does anyone know if I can open a basic bank account in my Company name and another in my own name?

 

Most of the high street banks have personal basic accounts available to anyone but you will not get overdraft facilities or a cheque book. A business account will depend on the bank but if you are looking for overdraft facilities, IMO you will find it difficult. Shop around or you may find a credit union helpful.

[diddydicky]

it is highly unlikely that a court would grant a creditor a forced sale- where reasonable payments against the court judgement have been made

 

usually large debts mean that the debtor may be taking 10-12-20-40 years to repay a judgement if he is offering only token paymenets

 

the average householder moves home every 7 years (this average was falling but to to the economy may no longer be so)

 

therefore it is reasonable that the creditor should seek security in case the debtor- who is only making token or minor payments- should sell their home and still not repay the creditor from the proceeds

 

the vast majority of creditors are happy to sit on the charging order if payments are maintained

 

i personally have found in the past that you can negotiate a very good F & F a couple of years after a CO since after a couple of years of the creditor writing off in his annual accounts- he is more than willing to accept an offer

 

The first thing to do (IMO) after a charging order is made and monthly payments agreed- is to cancel any DD or S/O and make monthly manual payments by cheque and ask for receipts

 

after a year or so- the creditor will be amenable to an offer

 

the cost to the creditor in having to deal with manual transactions is disproportional to the amount he is receving from you and in short becomes a "pain in the a**e"

Edited November 10, 2010 by diddydicky

[manchestman]

the cost to the creditor in having to deal with manual transactions is disproportional to the amount he is receving from you and in short becomes a "pain in the a**e"

 

How very true. The only downside is the anticpated disappearance of cheques in the not too distant future, but still, the idea of being 'more trouble than it's worth to collect' is an optimistic way of looking at receiving a charging order and a way that I had never thought of looking at before, only seeing it as defeat previously. Thanks DD, that's another good idea banked for when needed.

[Chipmeister]

If a creditor gets a charging order is it purely for the amount of the debt or can interest be charged on it, and if so, at what rate please?

[diddydicky]

interest is or is not charged on the judgement obtained- not on the charging order- which itself is merely a means of security for whatever is contained in the CCJ

[Chipmeister]

interest is or is not charged on the judgement obtained- not on the charging order- which itself is merely a means of security for whatever is contained in the CCJ

 

Sorry if I'm being thick here.

 

When it gets the court, a judge would say, ok, pay up forthwith, your debt is (say) £7,620. The charging order is set at £7,620 and at this point he would or wouldn't set an interest rate on the example debt of £7,620??

[AndyOrch]

Sorry if I'm being thick here.

 

When it gets the court, a judge would say, ok, pay up forthwith, your debt is (say) £7,620. The charging order is set at £7,620 The Judgment is set not the Charging order.Charging Orders dont have a monetary value and at this point he would or wouldn't set an interest rate on the example debt of £7,620??

 

Andy

[diddydicky]

no, the court would award a ccj to the claimant and it would either be a "forthwith" judgement- which means you have 28 days in which to pay it or an order to make monthly payments

 

ONLY when you have failed to comply with the forthwith order or the monthly payments- can the creditor go back to the court and ask for a charging order

[wycombe]

Thanks to all who have added their input. My apologies for no reply till now - my Internet access is currently very haphazard which is one of the consequences of struggling along on £63 a week! Also much of my time is spent job hunting - a no mean task these days when locally every vacancy seems to have 30 or 40 people chasing it. Being an 'old fart' probably means I am back of the queue when the CV's are considered! Still I remain optimistic and am happy to accept anything going so I can get off Jobseekers Allowance and start building up a little capital to get myself going again!

 

Anyway I will take FG's usual excellent advice and defend the CO up to the wire. I must admit though I now have a very jaundiced view of our legal system after my last encounter with it so am prepared for the worst case scenario.

 

Once the hearing is over I will post the result here.

 

Any further advice/comments are always welcome.

[wycombe]

My CO hearing is on Tuesday so I am doing some last minute preparations for this.

 

Thank to FG I have the couple or arguments to use that she so kindly outlined - namely:

 

a) A charging order would prejudice my other creditors who have agree token payments until I am back on my feet again and can afford more.

 

b) I have never been given the opportunity to demonstrate I can maintain regular payments as ordered by a court.

 

Also I have been considering adding the argument that I have been paying a higher level of interest on this credit card debt to reflect the risk of it being an unsecured debt. MBNA are now attempting to turn the unsecured debt into a secured one - hence taking no risk whatsoever meaning all the extra interest and punitive rate hikes charged to myself have been unjustified. Thus if the debt becomes secured through a CO then it should be done so on a far lower figure to reflect this.

 

If this is a valid argument I would appreciate some assistance from wordsmiths who are adept at phrasing such an argument clearly and effectively.

 

As always all comments, help and opinions welcomed.

[wycombe]

I failed to add that a couple of days ago - totally out of the blue - I received a copy of an Interim Charging Order that Restons's had obtained. Until I received this document from the Land Registry this is the very first I had heard of it. It is too late obviously for me to do anything about this but surely I should have had some information that they had applied for this so I could object? Or is this yet another underhand tactic that they are going to get away with?

[Paulb1972]

You will probably not get much life out of the argument of "Prejudice to the other Creditors" against CO im afraid.

 

Im a bit rusty on your thread but depending on the size of the debt they may also go for a Sale Order - this depends on your circumstances though whether it will be allowed.

 

Interim Charging Order - from insolvencyhelpline . co . uk (Cant post links...)

How is an application made?

 

The application for a charging order always has two stages:

STAGE ONE – THE INTERIM ORDERThe creditor makes an application for a charging order and the court will make what is called an interim charging order if it is satisfied that you own, or have a part share (an interest), in the property in question. This is NOT the final order. An interim charging order is usually made automatically without a hearing and a date for a full hearing is set. A copy of the interim order will be sent to you.

This should be done at least 21 days before the hearing date set by the District Judge. The hearing is for the court to decide whether or not to make the charging order permanent ('Final'). This hearing is likely to be held in the District Judge's private rooms.

The creditor will also register the interim charging order as a "caution" on your property with the Land Registry who should inform you of this in writing. This means you cannot sell the property before the hearing STAGE TWO - THE FINAL CHARGING ORDER The second stage is the court hearing in front of the District Judge. At this hearing the court will decide whether to make a permanent charge on the property. This is called a final charging order. If you object to a charging order being made final then you should send the creditor and the court written evidence stating why you object. You should do this at least 7 days before the hearing. This could be in a form of a letter of objection outlining all the arguments you have for why the charging order should not be made. This should be sent by registered post to both the creditor and the court.

If you do this then your arguments should be taken into account by the District Judge at the hearing. You should still go to the hearing and if you do not send any written evidence then it is vital that you go.

The court can refuse to make the charging order so you must serve a notice and go to the hearing. If you cannot attend on that date, contact the court for a different hearing date to be arranged. If you do not go, the charging order is likely to be made final by the court at the request of the creditor.

If the hearing has been arranged in another court, ask for it to be transferred to your local court. You can apply on an application form called an N244 explaining why you can't go to the hearing, e.g. due to the distance, travel or childcare costs. There is a fee for doing this. See the section on fees at the end of the factsheet. Phone us for advice.

 

[wycombe]

Thanks Paulb1972.

 

Very unfortunately I had no idea I had to present my arguments against a CO in advance to both the court and the creditor. Obviously 'ignorance is not bliss' so I am going to have to plead my ignorance of this due to being unable to afford legal assistance or advice.

 

I thought that because my wife has a 50% stake in the property and the debt having nothing whatever to do with her would make it difficult for them to get a 'Sale Order' as this would be punitive for her rather than for me.

 

This whole situation seems to be going from bad to worse!

[diddydicky]

you are panicking!

 

the charging order is a way of getting security for the debt

 

it is highly unlikely (almost impossible) that the court would order a sale of the property-

 

the original ccj must have been a "forthwith" order (you must pay in full within 28 days of the judgement)

 

if you do not pay within that time AND you have not, within that time made an application for a time order- then not surprisingly the creditor will then make the CO application

 

why did you not act during the 28 Days?

 

when a court makes a forthwith judgement- it is not for the court or the creditor to then provide you with "opportunities" to show that you can make regular payments- it is for YOU to then make an application to convert the forthwith order to an offer of monthly payments

 

 

t

 

this is what you need to explain to the court and get all your finances sorted out in order to make an offer of monthly payments

 

divide your disposable income between your unsecured creditors pro rata (based on the amount owed to each) including the one you have the ccj for and make this offer through the court

[wycombe]

Thanks DD for your input.

 

I had not been idle since MBNA got their CCJ. Following FG's advice I wrote to the court immediately asking for them to set a payment schedule to start paying off the debt. After hearing nothing I phoned the Court who told me I had to submit a Variation Order. I managed to get the £35 from a friend and I submitted this. From the Court I received aknowledgement of this and a date for the hearing (Tuesday). About a week afterwards I received the notification that Reston's were going for the CO - hearing exactly the same date and time as the one for my Variation Order.

 

I did ask on here whether the hearing for both was now one and the same - heard by the same judge. Presumably no one knew the answer to this or it was obviously the case. Of course I am panicking - I have not been in this situation before and just the faint threat of losing my home over what is (still) an unsecured debt made up of huge chunks of punitive interest charges with a bank who has steadfastly refused all offers of payments negotiated through myself, the CCCS and Community Legal Advice based on my current income. The Variation Order I hoped would set a level of payment that MBNA had to accept until I was in a position to pay them more. In fact I still do not know what the position is regarding this VO that I paid for - was it a total waste of money or will it be dealt with on Tuesday?

[Paulb1972]

Wycombe, as DD said dont panick!

 

The answer to the court question is - we dont know - what time are they being heard - if at the same time, then they will be. If not then they wont (that make sense?)

 

Do a I/E sheet and take this with you to the court.

 

There are a lot of factors regarding a Sale Order, dependents, health things like that plus equity to CO debt. But it is better to be pre-warned Restons usual tactic is CCJ/CO/SO.