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Charging Order

including wills and probate
Peanutte
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Charging Order

#345990

Postby Peanutte » October 7th, 2020, 7:22 pm

I am a volunteer at a small Credit Union.

About 10 years ago we made two small loans to a married couple. They made a few payments and then stopped. After writing and seeking repayment of the loans in the usual way, a colleague (long since retired) obtained a Charging Order over their jointly owned house. Over the years we have made numerous efforts to contact them about repaying the loans including using tracing agents. It seems that they moved abroad. One report said that they were very careful to avoid being traced.

They have recently reappeared and want the Charing Order removed because they want to sell the house.

We calculated what we regard as a very reasonable settlement figure based on the original interest rate of 1% per month (12.68%apr) - bearing in mind they have not paid a penny for some 10 years.

Some time ago a former volunteer wrote that she had stopped the interest - but that was because if the interest continued to build up our 'bad debt' book would grow and grow.

The wife is saying that they will not pay any interest because one of us called her a rude name on the phone - which is nonsense.

Their solicitors are now saying they will contact the Land Registry and have the Charge removed without our consent if we do not settle.

We are a Community Credit Union and we give our time freely to help people who are mostly not well off. The majority repay their loans and the interest - otherwise we could not operate. It seems unfair that this couple want to wriggle out of paying interest after not paying anything for 10 years.

We are not legal people and the sums involved really do not warrent us seeking expensive legal advice. In fact I spoke to a Solicitor very recently who knew less about Charing Orders than I do.

Does anyone know if their Solicitor can have the Charging Order removed without our consent? And how do we stand with regard to asking for interest?

Thank you in advance.

AsleepInYorkshire
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Re: Charging Order

#345995

Postby AsleepInYorkshire » October 7th, 2020, 7:45 pm

Peanutte wrote:I am a volunteer at a small Credit Union.

About 10 years ago we made two small loans to a married couple. They made a few payments and then stopped. After writing and seeking repayment of the loans in the usual way, a colleague (long since retired) obtained a Charging Order over their jointly owned house. Over the years we have made numerous efforts to contact them about repaying the loans including using tracing agents. It seems that they moved abroad. One report said that they were very careful to avoid being traced.

They have recently reappeared and want the Charing Order removed because they want to sell the house.

We calculated what we regard as a very reasonable settlement figure based on the original interest rate of 1% per month (12.68%apr) - bearing in mind they have not paid a penny for some 10 years.

Some time ago a former volunteer wrote that she had stopped the interest - but that was because if the interest continued to build up our 'bad debt' book would grow and grow.

The wife is saying that they will not pay any interest because one of us called her a rude name on the phone - which is nonsense.

Their solicitors are now saying they will contact the Land Registry and have the Charge removed without our consent if we do not settle.

We are a Community Credit Union and we give our time freely to help people who are mostly not well off. The majority repay their loans and the interest - otherwise we could not operate. It seems unfair that this couple want to wriggle out of paying interest after not paying anything for 10 years.

We are not legal people and the sums involved really do not warrent us seeking expensive legal advice. In fact I spoke to a Solicitor very recently who knew less about Charing Orders than I do.

Does anyone know if their Solicitor can have the Charging Order removed without our consent? And how do we stand with regard to asking for interest?

Thank you in advance.

It is highly likely that you do not have a charging order over the title. It is more likely you have a restriction. If it is a restriction it can be removed by "over-reaching".

https://www.gov.uk/government/publicati ... able-cause

https://en.wikipedia.org/wiki/Overreaching

I'd add that the bad debt will probably not accrue interest as it is against an individual[s] and not a business debt. It is therefore a personal debt. If you have allowed them not to pay the money for a period of time it may be that you are outside the statute of limitations to retrieve the debt.

I'd suggest you speak to a solicitor about this or if it is a small amount come to an agreement with them and grab as much cash as you can.

Subject of course to some legal person[s] confirming my comments above :)

AiY

Clitheroekid
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Re: Charging Order

#346016

Postby Clitheroekid » October 7th, 2020, 9:08 pm

AsleepInYorkshire wrote:It is highly likely that you do not have a charging order over the title. It is more likely you have a restriction. If it is a restriction it can be removed by "over-reaching".

I disagree. Peanutte specifically said that they have a charging order over their jointly owned house. If it's been registered against the legal title, as against the beneficial interest, then it will be protected by a notice, not a restriction, and over-reaching doesn't apply.

My belief that this is the case is reinforced by the fact that the solicitors are so agitated about it - if it was a charging order against just one of the owners they wouldn't be that bothered.

I'd add that the bad debt will probably not accrue interest as it is against an individual[s] and not a business debt. It is therefore a personal debt. If you have allowed them not to pay the money for a period of time it may be that you are outside the statute of limitations to retrieve the debt.

Again, that's not correct. There is no legal difference between an individual and a business as regards contractual interest, and I assume that the interest will have been accruing under the terms of the original loan agreement.

Limitation doesn't apply, as the necessary action to recover the debt has already taken place, hence the judgment and charging order.

Does anyone know if their Solicitor can have the Charging Order removed without our consent? And how do we stand with regard to asking for interest?

Assuming the original charging order was properly entered then from what you've said their solicitor has no grounds for having it removed. Likewise, depending on the terms of the original agreement there's no reason in principle why you shouldn't ask for interest.

However, it's a complicated technical area, and it would therefore be sensible to obtain some specific legal advice.

AsleepInYorkshire
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Re: Charging Order

#346022

Postby AsleepInYorkshire » October 7th, 2020, 9:50 pm

Clitheroekid wrote:
AsleepInYorkshire wrote:It is highly likely that you do not have a charging order over the title. It is more likely you have a restriction. If it is a restriction it can be removed by "over-reaching".

I disagree. Peanutte specifically said that they have a charging order over their jointly owned house. If it's been registered against the legal title, as against the beneficial interest, then it will be protected by a notice, not a restriction, and over-reaching doesn't apply.

My belief that this is the case is reinforced by the fact that the solicitors are so agitated about it - if it was a charging order against just one of the owners they wouldn't be that bothered.

I can't recall when it occurred - late 2009? (Just can't recall) but (if my appalling memory serves me right) legislation did stop the use of charging orders for recovery of personal debts. And before that many courts would not go down the route of charging orders on small debts. Which is why I have "assumed" a restriction has been placed on the title. I've come across this often as many "laymen" (I count myself in that category) confuse the term restriction as meaning charging order. If the debt is one name and not both then a charging order is much less likely. However, I stand to be corrected :)
AsleepInYorkshire wrote:I'd add that the bad debt will probably not accrue interest as it is against an individual[s] and not a business debt. It is therefore a personal debt. If you have allowed them not to pay the money for a period of time it may be that you are outside the statute of limitations to retrieve the debt.
Clitheroekid wrote:Again, that's not correct. There is no legal difference between an individual and a business as regards contractual interest, and I assume that the interest will have been accruing under the terms of the original loan agreement.

I wasn't too precise was I :) . Statutory interest cannot be added to a debt if the debt is covered by the Consumer Credit Act (which includes most credit agreements and bank overdrafts). This is not contractual interest. However, contractual interest builds up separately to the judgement and cannot be enforced by the charging order (if a charging order exists)
Clitheroekid wrote:Limitation doesn't apply, as the necessary action to recover the debt has already taken place, hence the judgment and charging order.

Noted :)

Very interesting stuff

AiY

UncleEbenezer
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Re: Charging Order

#346039

Postby UncleEbenezer » October 8th, 2020, 12:12 am

AsleepInYorkshire wrote:I can't recall when it occurred - late 2009? (Just can't recall) but (if my appalling memory serves me right) legislation did stop the use of charging orders for recovery of personal debts.

AiY

There's an epic story here of a case starting in 2010 in which a former tenant successfully used a charging order to recover a debt from an ex-landlord. It went as far as a court order for enforced sale of the house before the ex-landlord finally paid a bill inflated by the costs of several court hearings.


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