Charging Orders - discussion

[poundhound1808]

Not sure if this link has been posted earlier on this thread - if knowledge of these things starts spreading amongst debtors, it certainly will do amongst creditors as well, which could see an increase in Orders for Sale being applied for.

 

http://www.bllaw.co.uk/pdf/financeandrecoveries_0806_charging%20orders%20on%20property.pdf

[eggboxy1]

Not sure if this link has been posted earlier on this thread - if knowledge of these things starts spreading amongst debtors, it certainly will do amongst creditors as well, which could see an increase in Orders for Sale being applied for.

 

http://www.bllaw.co.uk/pdf/financeandrecoveries_0806_charging%20orders%20on%20property.pdf

 

The article you refer to is well spread around this forum and many others (such as "Charging Order The Myth" on MSE). But your assertion that more OFS would be applied for is, perhaps, ignorant of the facts of why more creditors don't go after OFS's already?

 

When you research that you might just refrain from trying to scare people off exercising their legal right and we can continue to put pressure on creditors giving up on this particular CO attempt and being more reasonable about accepting more reasonable repayments from people whose finances have been decimated by the recession.

[poundhound1808]

I have no idea why OFSs aren't already being applied for more widely, and I hope this won't happen in future either. It wasn't my intention to scare people off knowing and exercising their rights - I was only trying to imagine what might happen if this particular knowledge re. restrictions does become more common: right now, largely, creditors still get paid on COs (in the form of restrictions) after a sale, even though there is no legal obligation to do so. If, in a growing number of cases, they end up with nothing, what do you think they might do? I totally agree with you in that other routes, such as the one you describe, would be much preferred but 'acting reasonably' and 'debt collection' aren't exactly concepts that fit in with each other.

[sequenci]

I have no idea why OFSs aren't already being applied for more widely, and I hope this won't happen in future either. It wasn't my intention to scare people off knowing and exercising their rights - I was only trying to imagine what might happen if this particular knowledge re. restrictions does become more common: right now, largely, creditors still get paid on COs (in the form of restrictions) after a sale, even though there is no legal obligation to do so. If, in a growing number of cases, they end up with nothing, what do you think they might do? I totally agree with you in that other routes, such as the one you describe, would be much preferred but 'acting reasonably' and 'debt collection' aren't exactly concepts that fit in with each other.

 

The rules are very, very well known across the entire credit industry. The key reason why orders for sale are not more common is that they are very difficult to get granted whereas having a debt 'secured' by way of a charge isn't so. It is all about what is fair and reasonable.

[Ganymede]

I have no idea why OFSs aren't already being applied for more widely, and I hope this won't happen in future either. It wasn't my intention to scare people off knowing and exercising their rights - I was only trying to imagine what might happen if this particular knowledge re. restrictions does become more common: right now, largely, creditors still get paid on COs (in the form of restrictions) after a sale, even though there is no legal obligation to do so. If, in a growing number of cases, they end up with nothing, what do you think they might do? I totally agree with you in that other routes, such as the one you describe, would be much preferred but 'acting reasonably' and 'debt collection' aren't exactly concepts that fit in with each other.

 

 

 

There are not more OFS being made as Claimants are reluctant due to the cost and effort needed and Courts don't like them as they as seen as a draconian method of enforcement.

[sequenci]

There are not more OFS being made as Claimants are reluctant due to the cost and effort needed and Courts don't like them as they as seen as a draconian method of enforcement.

 

Absolutely right. Looking at the MOJ stats applications are actually reducing.

[eggboxy1]

If, in a growing number of cases, they end up with nothing, what do you think they might do?

 

Hopefully, it will force them to look at more reasonable alternatives and end the practice of putting people under the intolerable strain of believing they are about to be made homeless. As Sequenci and Ganymede have pointed out, OFS are extremely difficult to obtain but creditors don't want you to be aware of this as it makes their job in extracting money much harder.

 

but 'acting reasonably' and 'debt collection' aren't exactly concepts that fit in with each other.

 

Precisely why the information you first posted needs to be provided to everyone in this position to level the playing field.

[sequenci]

Hopefully, it will force them to look at more reasonable alternatives

 

The problem is Charging Orders are pretty reasonable when you compare them as an option to some of the alternatives. If they didn't exist at all the option of choice against home owners would be bankruptcy. I also prefer the use of charging orders against attachment of earnings orders. Although charging orders are, on the face of it, a bit of a pain there is plenty that can be put in place by the judgment debtor to give themselves piece of mind. Although most charging orders I come across end up being made final most courts will allow an instalment order to be granted which prevents the creditor from being able to undertake any further enforcement/execution whilst the payments are being made.

[eggboxy1]

If they didn't exist at all the option of choice against home owners would be bankruptcy.

 

Where is the evidence to support this, though?

 

The evidence against it is that Bankruptcy throws all creditor debts together so the pot is divided. Which creditor is then going to risk the, not unsubstantial, costs of pursuing bankruptcy on the hope they may get "something" back? Very few I would wager, and the fact is that very few creditors (in relation to debts owed) go after CO's as it is, so there isn't going to be a stampede of them.

 

Charging Orders have their place, I would accept, for certain types of debt; but creditors going afer CO's for variable rate, unsecured debts are, in my opinion, chancers and every effort to diminish the unfair advantage they currently have needs to be made to bring a change to this unfairness.

[sequenci]

Where is the evidence to support this, though?

 

It's pretty obvious that this would be a route that would be used far, far more if charging orders were not available; especially against those that might be asset rich but cash poor (e.g. those that might not work any more for one reason or another)

The evidence against it is that Bankruptcy throws all creditor debts together so the pot is divided.

Although that's very true creditors would be able to make a judgement call as to whether they believe the bankruptcy route is a viable proposition. We are seeing more and more DCA's going for bankruptcies rather than the usual county court action, this trend is a little worrying to me.

Which creditor is then going to risk the, not unsubstantial, costs of pursuing bankruptcy on the hope they may get "something" back? Very few I would wager

The debtor would be liable for the costs, and these, as I'm sure you know, can be VERY substantial

Charging Orders have their place, I would accept, for certain types of debt; but creditors going afer CO's for variable rate, unsecured debts are, in my opinion, chancers and every effort to diminish the unfair advantage they currently have needs to be made to bring a change to this unfairness.

I'm not a huge fan of CO's but I think they are a very reasonable option where used correctly. I do wholeheartedly feel that a change to the rules should be brought in making them ONLY available for debts of more than £5k and OFS should only be possible for debts of more than £10-£15k.

 

I also feel that the English/Welsh legal system should bring in something similar to the Scottish Debt Arrangement Scheme. They are excellent.

[eggboxy1]

It's pretty obvious that this would be a route that would be used far, far more if charging orders were not available; especially against those that might be asset rich but cash poor (e.g. those that might not work any more for one reason or another)

 

No it's YOUR assumption this is what they would do and ignores the fact of how few CO's are gone after by creditors who are owed thousands of pounds from debtors who they will know to be asset rich. CO's are very, very simple to obtain so why is it so few creditors go after them? it's because they use other methods of dealing with the debt (write off/debt sale etc) that works for them. The creditors who do pursue CO's on "unsecured" debt are, as I said, chancers who wouldn't risk funds doing other companies dirty work.

 

We are seeing more and more DCA's going for bankruptcies rather than the usual county court action, this trend is a little worrying to me.

 

Are there stats out there showing this trend? (I'm not disputing as I know you are a DC but given CO's currently give exclusive security why are they risking bankruptcy dealings where they share everything?)

 

The debtor would be liable for the costs, and these, as I'm sure you know, can be VERY substantial

 

But there is no guarantee of recovering costs liable or not

 

I'm not a huge fan of CO's but I think they are a very reasonable option where used correctly. I do wholeheartedly feel that a change to the rules should be brought in making them ONLY available for debts of more than £5k and OFS should only be possible for debts of more than £10-£15k.

 

I also feel that the English/Welsh legal system should bring in something similar to the Scottish Debt Arrangement Scheme. They are excellent.

 

I partly agree (I can't reconcile security for a debt charging unsecured rates) but creditors are not giving the full facts to debtors in allaying their fears regarding an OFS. Instead they play on it as witnessed by the panic seen on these boards by peope who think they are going to be out on the street for a credit card debt.

 

I do understand where you are coming from, Sequenci, but if people lie down in fear of something worse happening then nothing gets changed.

[Ganymede]

You need to distinguish between secured a debt and securing a judgment.

[sequenci]

No it's YOUR assumption this is what they would do and ignores the fact of how few CO's are gone after by creditors who are owed thousands of pounds from debtors who they will know to be asset rich. CO's are very, very simple to obtain so why is it so few creditors go after them? it's because they use other methods of dealing with the debt (write off/debt sale etc) that works for them. The creditors who do pursue CO's on "unsecured" debt are, as I said, chancers who wouldn't risk funds doing other companies dirty work.

 

I can only go by historic information based upon the time I've worked within the credit/debt industry. I wouldn't say those that go for CO's are 'chancers' in the main (granted lots of 'fly by night DCAs obviously use CO's too). We see a lot of big banks use them, Natwest/RBS seem to go for them a lot for example.

 

Yup, there are stats from both the MOJ and the Insolvency Service. That said, the IS stats are nowhere near as good as the info from the MOJ which is always excellent and very detailed.

 

Nothing is going to change as far as enforcement mechanisms are concerned. What needs to change, and what might be able to actually be changed, is the behaviours of creditors and especially how they go about the collection of debts. A regulative body with greater powers would be the first place to start, and then perhaps something like the DAS I've already mentioned. Those two things would really do huge benefits for the industry.

[eggboxy1]

You need to distinguish between secured a debt and securing a judgment.

 

I understand the difference but not sure I understand the point you are making??

 

Sequenci

 

I have to bow to your greater experience on the stats (and I'll certainly give them a look) but I still see denying creditors as the only way to make effective changes in this unfair system.

[sequenci]

Your opinions are just as valid as mine, or anyone elses! CAG is full of great ideas which is why I spend so much of my free time on it. The system is certainly unfair but I don't believe the issue lies with the court system per se. Well maybe the fact that many (county court) judges seem to be quite unaware of the correct systems and procedures surrounding regulated debts .

[Gaston Grimsdyke]

Absolutely right. Looking at the MOJ stats applications are actually reducing.

 

Aren't the stats the number of orders made, rather than the number of applications? In the majority of cases orders are not made quite simply because the debtor voluntarily pays, or enters into an arrangement to pay before it gets that far. Which is mission accomplished as far as the creditor is concerned.

[sequenci]

Aren't the stats the number of orders made, rather than the number of applications? In the majority of cases orders are not made quite simply because the debtor voluntarily pays, or enters into an arrangement to pay before it gets that far. Which is mission accomplished as far as the creditor is concerned.

 

It's the number of orders made, you're right. That said, due to the economic downturn most of the people I've seen facing a CO are unable to pay the debt and can only offer instalments - and the majority of those are flat refused by the judges to allow a forthwith + CO application.

[eggboxy1]

Your opinions are just as valid as mine, or anyone elses! .

 

A bit more valid, surely!

[Ganymede]

I understand the difference but not sure I understand the point you are making??

 

Sequenci

 

I have to bow to your greater experience on the stats (and I'll certainly give them a look) but I still see denying creditors as the only way to make effective changes in this unfair system.

 

 

The point is that a CO is a method of enforcement open to all creditors with a CCJ and this won't change any time soon.

 

It would appear from the tone of your posts that you want a complete ban on all credit related debts being able to be taken to Court to recover the monies owed?

 

I am aware that a large amount of credit debts are due to irresponsible lending from the banks, but consumers are also guilty of irresponsible borrowing. How is it fair on the rest of us that pay their debts that if others stop paying their is no recourse from the bank? If this happened interest rates on unsecured loans would rocket to payday levels or the credit would stop being offered.

[sequenci]

A bit more valid, surely!

 

Exactly the same. An opinion is an opinion. And many of mine, my wife keeps informing me, completely suck.

[eggboxy1]

It would appear from the tone of your posts that you want a complete ban on all credit related debts being able to be taken to Court to recover the monies owed?

 

Anyone with half a brain would see my posts are directed to the unfairness of creditors being able gain security (in whatever form) for a debt that was able to be charged high interest rates through being UNSECURED. Hence, if I can't pay my mortgage I would expect the bank to take me to court to recover their money and if I lost my house not long after I can have no problem with that as that is what was agreed.

 

If this happened interest rates on unsecured loans would rocket to payday levels or the credit would stop being offered.

 

Utter nonsense! The rates applied to unsecured loans reflect the risk of no security and those are still being offered in the 10-15% bracket despite all the huge defaults caused by the recession.

 

As I have said before, if companies pursuing a CO on an unsecured debt were made to revise the interest rate to reflect a rate that would have been been charged on a secured loan we might see a different attitude and acceptance to them. In a lot of cases the debt being "secured" is made up of huge amounts of compound interest created by creditors having raised the rate to 30%+. How, can anyone justify this as fair?

Edited May 29, 2012 by eggboxy1

[OnMyWayOut]

There's a number of ways that allowing charging orders on unsecured loans seem to break natural justice: -

 

1. Unsecured loans and cards are sold and priced as unsecured with higher interest rates to cover the risk of default

2. Creditors seem to be able to add interest at 8% on the charging order even though it is a judgement on a CCA debt

3. A debtor without property cannot be charged this extra interest because they can't get a charging order

4. Many of these judgements debts are in favour of secondary market creditors, not the original lender - why should they be able to secure a debt that they only paid 4-10% for and add interest?

 

Will these changes be retrospective - i.e. a judgement already in place with instalments up to date - will the creditor be able to request a charging order once this comes into force?

 

OMWO

[Old Cogger]

a question I asked a long time ago regarding rates on unsecured debts and charging orders = no reply from sites competetly wrong to turn into a secured debt in fact criminal.

Edited July 3, 2012 by Old Cogger

[MadScouser]

Would there be milage in issueing a counterclaim as part of any ICO proceedings for the interest differential between a secured and unsecured loan?

[eggboxy1]

Would there be milage in issueing a counterclaim as part of any ICO proceedings for the interest differential between a secured and unsecured loan?

 

It would certainly be interesting to see what outcome a claim of that sort reaped?

 

A product that sets rates based on risk that, subsequently, has that risk removed; certainly needs to be tested as to it's fairness.