To obtain a charging order the creditor first needs to apply to the court for an interim charging order. No notice is required and the judge can grant the interim order without the debtor attending the hearing if he is satisfied that there are grounds for it. The judge will then set a date for the final hearing.
The debtor must be given at least 21 days notice.
CHARGING ORDERS AND INTERVENING ORDERS
A bank obtained a charging order nisi over the defendant’s property. Shortly afterwards, the defendant
obtained an interim order as a first step to an IVA under the Insolvency Act 1986, which provided that whilst the order was in force,
“no other proceedings, and no execution or other legal process, may be commenced or continued against the debtor or his property without the leave of the court”.
The bank was not made aware of the order and obtained an order absolute. The defendant subsequently sought to have that order set aside under the Act, as leave had not been sought or given. The court sought to exercise its discretion and upheld the order in the bank’s favour.
On appeal, the Court of Appeal found that the
court’s permission was a strict requirement before the charging order could be made absolute, and there was
no discretion to maintain the order where that permission had not been obtained. So the interim order prevented an execution process without the Court’s permission.
This case can be contrasted with the decision in Ropaigealach v Allied Irish Bank (see Banking Bulletin - January 2002) where the court had exercised its discretion in allowing a charging order nisi to be made absolute where an instalment order for repayment of the charged debt had been made in the intervening period.
(information obtained from various Banking Bulletin publications)
Good luck Debbie
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