Charging Orders - discussion

[asokn]

But as a method of enforcing a CCJ it is, in my opinion, easily the least invasive. I would much prefer a CO than bailiffs, bankruptcy, attachment of earnings etc

[asokn]

shameful the way djs clearly do not adhere to the law.

 

Out of pure curiosity, in what way did the DJ not follow the law in your case? On what basis did you challenge the application of interest?

[asokn]

I see, thanks for that.

[asokn]

That's a good proposal but it would be wide open to abuse. A debtor could easily convince a court that the debt can be repaid in a reasonable period thus defeating the CO application only to immediately divest himself of his assets and stop paying; the creditor has then lost the chance to enforce by way of CO.

 

Having said that though such an approach would leave the debtor open to bankruptcy etc so they may well be cutting off their nose to spite their face.

[asokn]

Exactly. I think the prospect of a CO is far worse than the reality. At the end of the day no-one knows about it and the debtor needs to just keep paying what is affordable/ordered and that's that.

 

I think personally that a far bigger issue is the bankruptcy limit being a paltry £750!

[asokn]

I have to say that I don't understand why a charging order causes *maximum* pressure on a debtor; I would imagine that regular bailiff visits or the threat of an AoE, which could jeopardise employment, would be far more pressurising that an extra entry being made at the Land Registry. But, there's no doubting it does cause a lot of stress and pressure.

[asokn]

Despite our circumstances at the time, loss of job etc and offering to pay around 60% of the original contractural payment,creditor took this route. Wrong wrong wrong!

 

But why is it wrong for a person to expect to have their legal rights upheld in court? There's no reason why a creditor should accept 40% less than they are owed (and they *are* owed it because a judgment says so) just because the debtor can't afford to pay it back.

 

I suspect that most people would be up in arms if their legal rights were infringed and a court refused to give them any redress. A judgment is only as good as the enforcement it brings and I'll repeat that a CO really isn't a bad way for a debtor to have a judgment against them enforced.

[asokn]

Increasing numbers of bureaux are reporting that more courts are now making ‘forthwith’ judgments which require immediate payment in full, instead of instalment orders, even where debtors have fully informed the court of their inability to pay large instalments.

This new practice of many county courts and creditors results in very extreme consequences for relatively small debts:

 

The CAB would say that, they are entirely one sided in favour of debtors and, in addition, are desperately trying to justify their continued existence in the light of severe funding cuts.

 

As for forthwith judgments, far too many debtors are, frankly, taking the mickey out of the courts and their creditor by making derisory offers of £1 per month against debts of thousands of pounds in the mistaken belief, often perpetuated on this forum, that the court will only order payments at the rate they say they can afford. That leads to the conclusion that the debt cannot be paid within a reasonable period and actually leaves the judge with no choice but to make a forthwith order.

 

As an extra point, how often in the experience just of members of this forum have we seen people post for the first time when a charging order application or application for an order for sale is made? How often have we seen people fail to respond to court claims, letters from the creditor or any other attempt to deal with the debt and only once the CO route is used does the debtor finally pull their head from the sand and start engaging in the issue? It's a hugely common occurrence and leads creditors to believe that only by taking action against property will they finally extract some cooperation from the debtor.

[asokn]

Good points from Andy & Duff I agree.

Obvious that some posters are in the view that the creditors are right to take this stance.

So looking at this from there perspective, I see lots of reasons it's not to there advantage and hinders there aim of collecting there debt. Often the original CCJ and then the C/O slows the process of repayment.

1/ The debtor usually has a installment order after, (or before) the C/O. Very little that the creditor can now do.

The debtor now sits on the repayment, even if they could now pay more. Gain by creditor NIL.(apart from accounts?)

Better solution except reduced payment with a review after a period of time and then a charge.

2/C/o puts debtor into negative equity, can't move to improve circumstance so as above.

Gain by creditor Nil. Negative may have been able to settle or pay more.

3/C/o negative equity, debtor moves and rents.

Pays ongoing payment or decides on bankruptcy

Gain by creditor Nil. Negative as debt written off.

 

4/Debtor, is bitter by the experience of the process and continues with installment order even though circumstances have changed, and could pay more, and sell property and not settle as it's a restriction.

Gain by creditor NIL. Negative, as creditor may have payed more and settled upon Sale.

I'm sure there are many other scenarios. In truth as Duff has stated it's a rush to obtain a CCJ & C/O even if it is in the long term detriment of the Creditor, other factors at play here.

 

It's self evident that securing debts by way of charging orders is to the benefit of creditors. Otherwise they wouldn't do it to anything like the extent that they currently do! To argue that a CO gives little benefit to a creditor is manifestly absurd.

[asokn]

Excuse me?

 

You have the audacity to criticise my intellectual ability but can't spell "delusion" or use it properly in a sentence?

Edited March 27, 2012 by asokn

[asokn]

Unfortunately sequenci, your stance (reasonable and valid though it is) will almost certaintly mean that you have "failed to comprehend the complexity of the discussion". Much better to say "me hate charging orders. Charging orders bad" as this shows a well balanced and carefully considered intellectual position.

[asokn]

The charge only attaches to the debtor's share of the property, whatever that may be. If, for example, the debtor owes £40,000 and has a quarter share in a property worth £100,000 in total then the charging order attaches to that quarter share, £25,000. When the property is sold the debtor will not receive any money as it will all be used to repay part of the debt but the creditor has no claim to the other three quarters of the sale proceeds. The creditor becomes unsecured again but now the debt is reduced to £15,000.

 

Some people will suggest that because the charge is registered as a restriction this makes a difference and the creditor need not be paid. In reality it just doesn't work like that so don't worry yourself about the apparent relevance of a restriction.

[asokn]

But, in reality, nobody will buy a house without an undertaking from the seller's solicitor to discharge all existing charges as a condition of the purchase.

[asokn]

her buyers Solicitor "refused to budge" without the undertaking you talk of... in this instance, the creditor did obtain some money from the debtor... the buyers request to proceed with the sale...

 

I don't see the difference between what happened and what I said. Anyway, I don't say it can't be done just that the reality in 99% of conveyances is that it isn't.

[asokn]

Exactly, so unless you have a perfect storm of a desperate buyer, a willing solicitor, someone in the know at the land registry and a seller who is prepared to challenge their conveyancing solicitor on the point then things pan out in the usual way and the creditor is paid.

[asokn]

I agree that people *should* try to challenge the status quo but in reality they don't.

 

Anyway, let's leave it there. I think we've both made our points on this aspect of the discussion.

[asokn]

I particularly enjoyed the table in the report which showed that no orders for sale had been made in the sample group for less than £1,000 anyway!

[asokn]

The Trusts of Land and Appointment of Trustees Act.

 

You may want to read Pickering v Wells and Close Invoice Finance v Pile for an interesting look at how ToLaTA affects applications for orders for sale.

 

EDIT: Beaten to it