charging order and bankruptcy

[delsey33]

Hi all, hope someone can help me decide the best thing to do. We have a charging order for £32k being issued on 12th october and are currently dealing with payplan. they have advised us to attend the court to oppose this. Our house is currently worth around £165-£170k with a mortgage of £155. We have looked into doing and iva but dont have the disposable income for this, so are paying payplan £200 a month towards a debt of £110. This is going to take forever to pay off, but we would've liked to have waited till our house had some more equity in it to remortgage in a few years time and maybe offer a full and final settlement, but now with the charging order, we are never goin to get enough equity to pay everyone off, so bankruptcy is imminent. Would we be best to go for BR before the charging order takes place? What happens if the charging order goes on the house and then we go BR? Thanks to anyone who can help.

[MelanieGiles]

Hi Delsey

You are yet another person on the long and winding road of a DMP which will take you 45 years to pay off even if creditors refrain from taking action against you (and you can see that they won't) or stop charging you interest (unlikely).

I am not quite sure why Payplan feel that you should attend Court to oppose the charging order. The charging order could well be your saving grace here, in that if it is granted - which is most likely as you do not deny that you owe the debt, it then removes any equity you have in the property which would be at risk under bankruptcy proceedings.

You are then free to declare yourselves bankrupt and not lose your house. You will of course have to make ongoing payments to the charging order creditor - but as you say you have £200 available.


Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

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[delsey33]

Thankyou so much Melanie, this makes my mind clear now. I really dont want to lose our house, tho had resided to the fact it may go, so will just have to wait and see. I wondered whether NR would insist on the house being sold and settling for a £10k payment instead of the £32k that we now owe.
thanks again for replying so soon!

[sonyse2t5]

NR what a surprise....they say a wounded animal is more dangerous than a non wounded one...

[Soulgrowth]

Reading the replies with interest ... never thought of a charging order in that respect before Melanie ... kind of puts a different light on things!
A mine of information as usual [:)]
Debbie

www.babynamings.co.uk

www.soulgrowth.co.uk

[mikebdomain]

I just want to add that; someone who holds a charging order on your property, CAN apply to the court to force a sale. It would then depend entirely on the circumstances of both parties as to whether an order for sale is made, but it is possible to achieve this.

If you have come to a written agreement, or been in constant contact with your creditor, (even via a DMP) and you have kept to that agreement. E.g. kept up payments against any debt, an unsecured creditor MAY not be able to achieve a charging order. However, If the judge does not know all the details, and you do not attend court, then a charging order will defiantly be issued.

I would suggest you attend the court on the day of the hearing, if not to stop the order, but to negotiate the conditions of the order. You MAY be able to:

- argue that your original agreement with your creditor is rescinded as you have made alternative arrangements via a third party (DMP) and have kept to those arrangements.
- argue that other creditors would be likely to be unduly prejudiced by the making of the order (COA, section1(5)).
- request from the court that all interest on the outstanding amount be stopped and the charge to be for a fixed amount.
- request from the court that they grant a charging order IF the creditor agreed not to seek repossession or a forced sale of the property if you agreed to a continuing payment to reduce the outstanding amount.

Also check the amount your creditor is seeking a charging order for, does it include unfair charges? If they have been writing you letters and then charging you for those letters and adding interest to those charges it would make your arrears with them look much worse than they actually are.

I would also suggest you seek advice from an experienced solicitor used to dealing with these matters, I’m not sure if you would be entitled to legal aid, but a call to a solicitor should clarify this.

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[MelanieGiles]

Good advice as to how to deal with a charging order, Mike, but the point I make is that it is better for this poster to be carrying a debt of £32k secured against their property, than trying to deal with £110 when there is minimal equity and only £200 disposable. A DMP on that basis is absolutely ridiculous.

If they declare bankrupt prior to the charging order, they are likely to lose their property on the grounds of minimal but sufficient equity to warrant proceedings. If there is a charging order in place, then they are in negative equity, the OR will do a quick £1 beneficial interest deal, and they are left just paying off the one creditor whilst retaining their home.

Very unfair to the other creditors, but let's face it this DMP is going nowhere to reduce their debts. Everyone concerned here is better off walking away from this and moving forward.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

I concur Melenie, a DMP in this situation is a lost cause and your advice regarding bankruptcy is on the face of it, absolutely right.

I do suggest, however, that delsey33 does attend court to contest and negotiate the conditions of the charging order.

Also delsey33 should ensure that the charging order is 'made absolute' well in advance of the application for bankruptcy to ensure that it stands.


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Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
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Check out my blog at:
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Please read our Initial Disclosure Document(IDD):
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[mikebdomain]

Melenie

Just had another though on this;

If there is 10k (155 outstanding against 165 value) equity in the property and only one partner goes for bankruptcy, the beneficial interest is likely to be less than 5k (with early redemption charges etc.) that the official receiver could seize.

If the charging order was able to be stopped with the fact that other creditors (in the DMP) would be likely to be unduly prejudiced by the making of the order (COA, section1(5)).

Could they, (delsey33) not write off the 35k with a bankruptcy, then a relative or spouse offer to buy the beneficial interest for 5k from the official receiver?

Just a thought… (could have it completly wrong)


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LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
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Check out my blog at:
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Please read our Initial Disclosure Document(IDD):
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[MelanieGiles]

Yes that is possible, but with debts at the level that these guys are carrying I would be suprised if only one partner needs to go bankrupt. This also leads to more uncertainty with regard to the property, as the OR can sit on this for up to 3 years before deciding when to sell.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
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[Soulgrowth]

Mike you are also a mine of information!! What would we do without you folks!!

I am attending court this coming Wednesday as a charging order had been put on my proprety by one creditor during which time I was in an IVA AND making arrangements to offer a full and final settlement. The charge has now been settled as it was blocking the release of the monies from the re-mortgage to offer the F&F to all the creditors. My letter of defence to His Honour is that whilst I fully accept that I am indebted to the Claimant I am disappointed because I have a moral obligation to treat ALL my creditors equally.

Is there any instance in which a charge can be overuled ... I have no expectations of Wednesday's hearing at all ... but it would be absolutely brilliant of some modifications could be made, so the the Claimant has to concede some back.

If the charging order was able to be stopped with the fact that other creditors (in the DMP) would be likely to be unduly prejudiced by the making of the order (COA, section1(5)).

Is this in the Insolvency Act 1986 Mike?

I am off to invesitigate ... you are a star Mike!

Debbie

www.babynamings.co.uk

www.soulgrowth.co.uk

[mikebdomain]

9.101 Introduction
A charging order is defined by the Charging Orders Act 1979 (the COA), section 1. Under the COA, section 1, a creditor may apply to the court for an order imposing a charge on any property, specified in the COA, section 2, (see paragraph 9.104), of the debtor to secure payment of any money due. The court will only make a charging order having considered the personal circumstances of the debtor and whether any other creditor of the debtor would be likely to be unduly prejudiced by the making of the order (COA, section1(5)).

Notes: [Charging Orders Act 1979, s1 and s2] [Charging Orders Act 1979, s1(5)]


9.105 Effect of liquidation or bankruptcy
Provided the charging order was made absolute prior to the commencement of the liquidation or bankruptcy, a creditor is entitled to retain the benefit of a charging order. If the official receiver becomes aware that a charging order nisi was made prior to the commencement of the insolvency, which has not been made absolute, he should inform the court of the insolvency proceedings. In Re Roberts Petroleum Ltd v Bernard Kenny Ltd (in liquidation) [1983] 1 All ER 564 HL it was held that the making of a winding-up order was sufficient grounds for the charging order not to be made absolute and for the order nisi to be discharged. The case may also be applied following the making of a bankruptcy order. On becoming aware of the existence of a charging order nisi, the official receiver when notifying the court of the insolvency proceedings, should exercise care that he is not deemed to have entered into the legal proceedings, unless he has adequate funds to cover any adverse costs which may arise. The official receiver may, when informing the court of the insolvency proceedings, refer to the decision in Re Roberts Petroleum. If the official receiver follows the advice given in this paragraph, it is considered that he will not have entered into the proceedings.

Notes: [s183 or s346]

See:
http://www.insolvency.gov.uk/freedomofi ... part_4.htm

FREE ADVICE IS THE BEST ADVICE

LEYBRIDGE LIMITED
Mortgage Broker
Specialising in adverse credit.

see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf

[Soulgrowth]

Thanks Mike ... I shall investigate [:)]

Debbie

www.babynamings.co.uk

www.soulgrowth.co.uk

[Soulgrowth]

Just another thought .. the notice of the hearing which I only recieved by chance via the Land Registry was an "Interim Charging Order" ... does that mean that even though I have paid over the monies to the creditor the charge had not yet actually be ordered?

Debbie

www.babynamings.co.uk

www.soulgrowth.co.uk

[MelanieGiles]

Correct!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp