Repairing Credit—County Court Charging Orders

 Repairing Credit—County Court Charging Orders

A 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. That is to say, it takes on the same role as a mortgage does in securing a loan by becoming a "security" for the debt.



A court hearing is required prior to the issuance of a charging order. You can stop a charge order in its tracks in a few different ways.



Creditors who have sued you in High Court may seek to serve you with a charge order, and this article explains how the country courts handle such requests. If you are uncertain about what to do after suspecting the filing of a charge order against you, this report will provide guidance.





When a debtor wants a charging order, they can ask the courts to issue one.



A creditor may ask the court to impose a charging 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.



If you have already been found guilty of a debt and ordered to pay it back in installments but have failed to do so, this is another scenario to consider.



A charge order cannot be issued by the court if you are already making all of your court-ordered installment payments on time. The ruling in the seminal case of Mercantile Credit Co Ltd v. Ellis, which dealt with debt payments and charge orders, in 1997 forms the basis for this.





WHAT TO DO WHEN APPLYING FOR A CHARGING ORDER



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



The Interim Charging Order: The First Stage



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.



This is NOT the final invoice, so keep that in mind. Even in the absence of a hearing, the court can issue this order and have a copy given to you. Following the issuance of the interim order, a date is scheduled for a full hearing.



Typically, the District Judge will be able to schedule a hearing to determine the permanent or final status of the interim charging order after around 21 days. In most cases, the District Judge will hold this hearing in his or her private chambers.



Another thing that will happen is that the Land Registry will get a copy of the interim charge order that is against you. Put this as a "caution" on your property so you can't get rid of it before the hearing. This "caution" will also be sent to you in writing by the Land Registry.





Step 2: The Finalization of the Charging Order



The next step is to schedule a hearing with the District Judge, who will then have the responsibility of deciding whether the property in issue should have the interim charging order made final. The final charging order is another name for this. Please ensure that any written objections to the final charge order are submitted to the court and the creditor no later than 7 days prior to the hearing.



To prevent a final charge order from being issued against you and your property, you must submit an objection letter by registered mail that explains all of your arguments and provides proof of your case.





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. If you find the scheduled hearing date to be inconvenient, it is imperative that you promptly notify the court in order to reschedule it. The court may side with the creditor and make the charge order final and irrevocable if you do not attend the hearing, which could hurt your case.



Your right to request a hearing in a court within your area is unaffected if you are unable to attend a hearing because it has been filed in another court. To do this, you must complete out a N244 application, which, for a price, allows you to specify the reasons for the transfer, such as the length of travel, the distance traveled, or the anticipated expenses for childcare.





Putting a pending charging order on hold



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. These conditions include:



1) individual circumstances of the "debtor"



Any other creditors whose rights might be violated by a charging order must be considered by the court. 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. To prevent the charge order from being released, it could be prudent to provide proof that you have already established a payment plan with your other creditors.



If you could provide a rundown of your obligations along with the amounts owed and whether or not any of your creditors have delayed charging you interest, that would be helpful.



The creditor is also required to give a list of all other creditors that they are aware of when they file a charging order.



Creditors may be provided with a copy of the interim order so they can object to its issue at the hearing, but the court is under no obligation to do so. This implies that the hearing for the interim order is probably not going to be public knowledge to your other creditors. In addition, you have the option to state in your written objections the possibility that one or more of them may be "unduly prejudiced" by the charging order.



You can also utilize 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 jeopardized, you can ask the court to deduct the payments from your paycheck if you're working.



Look into your debts to see whether any of them fall under the Consumer Credit Act. Considering this, you may be able to utilize it to your advantage when applying for a Time Order rather than a charging order. If you want to extend the payment time or change the monthly payment plan, the court might look at this.



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



In the event that bankruptcy is imminent, it is important to emphasize that a charging order would only secure payment for one creditor, which will negatively impact your other creditors.



One more way to fight against a charge order from a creditor is to put a condition on your mortgage. This is especially the case if your property has negative equity, meaning that its value is lower than your mortgage and that no amount of money could be recovered from its sale or auction to pay off your creditors.



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 utilize this against a charging order.



Bring attention to the fact that selling your property to settle your debts could put you and your loved ones in a tough position. Even if the debt is in your name alone, a charging order would affect everyone in your household because you and your spouse own the house jointly.



2.) Prone to devastating family illnesses or disabilities



You should inform the court if selling your house to settle your debts will violate the rights of your loved ones who are particularly vulnerable, such as those who are terminally sick or in need of specialized medical care.



It is possible that the court may decide to issue a final charging order even though all of your arguments fail to uncover any grounds. You have the option to ask the court to prevent the sale of your house if you pay off the debt in monthly installments. If the court does not consider your request during the hearing, you can apply for a N245 loan to pay off your debt in installments.





UNIQUE DEBT, CO-OWNED HOUSING



One more thing that can work in your favor is if you and another person own your house jointly but you have a debt that is only in your name. Not only should you mention this in your written argument, but you should also emphasize it at the hearing. 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. The following are examples of potential factors to be examined:



1.) Acknowledging the homebuyer who made the initial investment

2.) Determining who is responsible for making mortgage payments

3.) If there are minor children living in the home, you have the option to ask the court to change the charging order so that the house cannot be sold until the children are fully grown.



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.





ONCE YOU HAVE NOT BEEN DEFAULT AND THERE WAS AN EARLY 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. In the event that the debtor has previously been directed by the court to make monthly installment payments or the whole sum payable in a "forthwith" ruling, but has neglected to do so, the court may issue charging orders. Remember to bring up this historic case at the hearing if you are in a position where you have previously been issued an installment order and are current on your 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



Creditors can seek charging orders from the county court, which would allow them to add additional interest to the debt. But in these circumstances, interest cannot be accrued:



1.) The Consumer Credit Act has served to secure the debt. Standard credit agreements and bank overdrafts are examples of this kind of debt.

2.) Even excluding the Consumer Credit Act, the total amount of debt is only £5,000.



In the absence of the aforementioned circumstances and in the event that the debt exceeds £5,000, the court has the authority to establish the interest rate using the normal rate.



Additionally, the creditor's objections must be considered before the final decision is made by the county court before interest can be levied.

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