Credit Restoration: County Court Charging Orders

 Credit Restoration: County Court Charging Orders

CHARGING ORDER DEFINITION

Creditors can get a monetary ruling requiring debtors to repay their obligations by filing charging orders with the courts.

The debt is immediately protected upon filing of a charging order. Put another way, it serves as a "security" for the debt, similar to how a mortgage secures a home or piece of land.

The issuance of a charge order is contingent upon the completion of a court hearing. Avoiding the issuance of a charging order is possible in multiple ways.

This report will walk you through the country court's charging order procedures and what to do if your creditors sue you in High Court and then seek to serve you with a charge order. If you are afraid that a charging order has been issued against you but aren't sure what to do next, this report will give you the steps to take.


In some situations, a creditor may seek a charging order from the courts.

Creditors have the option to ask the court to obtain a charge order in two different situations. One of these situations is when a "forthwith" judgement has already been entered against you in a county court, requiring you to pay the obligation. This means that the full amount of the debt needs to be paid immediately or by a specific date that the court sets.

Another scenario is when you have already been found guilty of a debt and have failed to pay any of the installments that were set out in a judgement against you.

A charge order cannot be issued by the court if you are already making all of your court-ordered installment payments on time. Reasoning for this comes from the seminal decision in the debt payment and charge order case of Mercantile Credit Co Ltd v. Ellis, which was decided in 1997.


APPLICATION PROCEDURE FOR CHARGING ORDER

The process of requesting a charging order consists of two steps:

STEP ONE: THE INTERIM CHARGE SCHEMA

The court must first determine that you own or have a stake in the property at issue whenever a creditor seeks to issue a charging order against you. Once this is determined, the court will issue a temporary restraining order.

The charging order itself is NOT this document. Even in the absence of a hearing, the court can issue this order and have a copy given to you. After an interim order is given, a full hearing date is arranged.

It should be possible for the District Judge to schedule a hearing to determine whether the interim charging order should be finalised or made permanent after about 21 days. The district judge's private chambers are the usual location for this hearing.

In addition to this, a duplicate of the interim charge order that is against you will be sent to the Land Registry. Put this as a "caution" on your property so you can't get rid of it before the hearing. You will also receive written notification of this "caution" from the Land Registry.


Step 2: The Finalisation of the Charging Order

Now that a hearing has been scheduled before the District Judge, it is up to the court to determine if the property in issue should have the interim charging order made final. A different name for this is the final charging order. At least seven days before to the hearing, you must submit a written objection to the final charge order to the court and the creditor.

A final charge order should not be issued against you and your property. In your objection letter, which must be sent through registered mail, you should state all of your arguments and give proof to support your stance.


Your answer might be considered during the hearing presided over by the District Judge if you send a letter of objection to the creditor and the courts. Even though you have submitted a written objection, it is crucial that you nonetheless show up for the hearing. If you have not provided any written proof whatsoever, your presence is even more crucial.

You are required to provide notice that you will be present at the hearing since the court retains the authority to defer the charging order. Please notify the court without delay if the scheduled hearing date is inconvenient. If you don't show up to the hearing, the court can side with the creditor and make the charging order permanent, which could hurt your case.

Any time you are unable to attend a hearing because it has been filed in a different court, you are fully entitled to ask that it be moved to a court in your region. If you need to switch jobs, you'll need to complete out a N244 application, which costs money and lets you explain why you're doing it (e.g., because of the long commute, the distance, or the expense of daycare).


RESERVING THE RIGHT TO CHARGE AT ANY TIME

It is up to the court to determine if the charging order should be issued. Before reaching a verdict, the court must take into account a number of factors outlined in the Charging Orders Act of 1979. Some of these conditions include:

1) individual circumstances of the "debtor"

The court must think about other creditors who might have their rights violated if a charging order is issued. Therefore, before making a decision, the court will need to consider your individual circumstances, including any other debts you may have, your mortgage, the amount of equity in your home, and whether you own the home alone or with a partner.

Issuing a charge order to one creditor would unfairly harm the rights of the others if you have multiple outstanding obligations with different creditors. You can avoid the charging order's release by providing proof that you have a payment plan with your other creditors.

A rundown of your debts, with amounts due and whether or if any creditors have withheld interest charges, would be helpful.

Similarly, if a creditor knows of any other creditors you may have, he or she must put their names on the charging order.

It is not mandatory that the court provide creditors with a copy of the interim order; nonetheless, it may be done so to allow them an opportunity to object to its issue during the hearing. As a result, it's quite improbable that any of your other creditors will be informed about the hearing for the temporary order. In your written objections, you are also allowed to raise the possibility that one or more of them may be "unduly prejudiced" by the charging order.

You can also utilise loan security as an argument. If a charge order is granted, the rights of your other unsecured creditors may be affected by whether your creditor provided you a secured or an unsecured loan.

To make the payments more manageable, you might ask the court for an installment order. The court can also mandate this as a form of debt settlement. Assuming your job security is not jeopardised, you can ask the court to deduct the payments from your paycheck if you're employed.

Take a look at your debts and see if any of them fall under the Consumer Credit Act. Considering this, you may be able to utilise it to your advantage when applying for a Time Order rather than a charging order. In order to modify your monthly payment schedule and lengthen the paying time, the court may investigate this.

You can also try to convince them to issue an administration order rather than a charging order as part of your case. You will only be eligible for this if your total indebtedness to creditors do not exceed £5,000.00.

Bring up the fact that a charge order will only secure payment for one creditor, which will hurt your other creditors if bankruptcy is imminent.

One more way to fight against a charge order from a creditor is to put a condition on your mortgage. If your home's value is lower than your mortgage, meaning that no amount of money could be collected from its sale or auction to pay off your obligation, this is especially important to keep in mind.

If, however, the amount of your debt is relatively little in comparison to your home's market value or equity, you may be able to utilise this against a charging order.

Highlight the potential stress on your loved ones that could result from having to sell your property to settle your debt. You and your spouse own the house jointly, so even if the debt is in your name alone, a charging order would affect everyone in your household.

2.) Prone to devastating family illnesses or disabilities

If you or a member of your immediate family is terminally sick or in need of specialised medical treatment, you should tell the court that selling your house to settle your debts will violate the rights of these people.

All of your arguments could be for nought if the court decides to issue a final charge order regardless of what you do. Paying the debt in monthly installments will allow you to petition the court to prevent the sale of your house. Obtain an application known as N245 to enable you to pay your debt in installments in the event that the court disregards this request at the hearing.


UNIQUE DEBT, CO-OWNED HOUSING

If you and another person own your house jointly, but you have a debt in your own name alone, there are ways to make it work to your benefit. Make sure to include this fact in your written argument and also mention it when you testify. To ensure that your home's co-owner has an opportunity to voice their concerns during the hearing, it is necessary to provide them with a copy of the interim order as well. Among the potential factors to be examined are:

1.) Acknowledging the homebuyer who made the initial investment
Find out who's responsible for making the mortgage payments.
3.) If there are minor children living in the house, you have the option to ask the court to change the charging order so that the house can't be sold until the kids are adults.

Get your home's co-owner to file written objections with the court at least seven days before the hearing so you can bolster this argument.

Ultimately, the charging order can only be enforced against your portion of the property, should the court elect to do so.


IF YOU HAVE NOT BEEN DEFAULT AND THERE IS A PREVIOUS INSTALLATION ORDER

It was determined in the 1987 seminal case of Mercantile Credit Co Ltd vs. Ellis that the court should not issue a charge order if the debtor makes all of his monthly instalments on time and never misses a payment. If the debtor has already been ordered by the court to pay in monthly installments or the entire sum in a "forthwith" ruling and still hasn't done so, then a charging order should be issued. Make sure to mention this historic instance at your hearing if you are currently in compliance with an instalment order and have not missed any payments.


Splitting Up or Divorcing

It is wise to seek the counsel of an attorney when you are in the midst of divorce proceedings, since these proceedings may involve the division of property or the residence. You might be able to prevent a charge order from being issued depending on where you are in the divorce process.


INTEREST

If a creditor files a charge order claim with the county court, he might really incorporate additional interest for the debt. On the other hand, the following criteria prevent the addition of interest:

1.) The Consumer Credit Act has served to secure the debt. Overdraft fees and standard credit agreements are examples of this form of debt.
2.) Total debt amounts to just £5,000—and that's without considering any coverage under the Consumer Credit Act.

The court may use the regular rate to determine interest if neither of the aforementioned conditions is satisfied and the amount exceeds £5,000.

Depending on the creditor's arguments, interest can only be assessed once the final decision is made by the county court.

Location:

Share :