CHARGING ORDER

[onlypassion]

Hi Guys,

I am looking for some advice on charging orders. We had various correspondence from Alliance & Leicester and Shoosmiths (their solicitors) regarding the debt we have with them, we have heard nothing for a while and presumed they were easing off until the creditors meeting had taken place. Today however, we have received notification that a charging order was placed on our home on 19th June.

I know this is obviously a bad thing but to what extent, what does the charging order really do?

I feel like we are fighting a losing battle at the minute, I think the changes of NR accepting our proposal are so slim and with this now hanging over us I am beginning to wonder if we have done the right thing.

Sorry for the moan just feel fed up!

Thanks for any advice
Andrea

[catullus]

Looking at past posts you have a creditors meeting set for early July.This being the case, there's nothing that you can do about the charging order at this stage,
The effect of a charging order is to give the creditor "mortgagee" status for the amount of their judgement debt. This will rank after any other secured creditors on your property.
For various reasons its unlikely that Northern Rock will vote for the proposal. You should talk to your IP quickly because it might be that he can get them to agree revised terms recognising their "secured" status.
Courts will rarely order a sale when a charging order has been granted but you need to know that costs and interest will continue to accrue on the debt.
This is a complicated area of IVA's and the sooner your IP knows the better

[MelanieGiles]

Isn't the charging order from Alliance & Leicester?

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Adrian Ratcliffe]

Hi onlypassion,
A charge on a property means that if the property is sold, the charge has usually to be paid first before any of the proceeds of the sale can be given to the judgment debtor. You should note, however, that a charging order does not compel the judgment debtor to sell the property.

If there are already charges on the property when your charge is registered, for example, arising from a mortgage, then that charge will be paid first.
I have 3 charges on my property.
So don't worry about it.
Melanie will probably know the implications of the NR proposal.
All the best
Adrian

[onlypassion]

Hi Catullus,

Thanks for the reply, my IP was aware that this was being pushed for and we were told by an advisor within the firm not to worry about this as it could be stopped as long as we sent to him the forms we had received which we did some weeks ago. When we received the form to say it had been granted we got such a shock as we thought this was in hand. Anyway these things happen, I suppose it's our mess and we have to get out of it.

OK so I presume then the IP does not get notice of this charging order from the court, we have to advise them ourselves. We will do this first thing tomorrow. I aggree with what your saying about NR and yes I have a creditors meeting for 6th offering a 43p return on approx £120k debt, not confident at all.

This whole thing is such a mess I just dont know which way to turn, we cant go BR and a debt management plan just seems un thinkable on such high debts. If only we could turn back time!

Thank you for your response.
Andrea

[onlypassion]

Melanie,

Yeah from Alliance & Leicester.

Andrea

[Storm]

For the IP's out there does this change the proposed IVA as the A&L debt would be excluded ?? and should the IP have resisted the order as it will be preferential to one creditor ??

[catullus]

Sorry I might have confused NR with A&L but everything that I said stands. A & L are very unlikely to vote positively in the IVA because, if the charging order hasn't become absolute. arguably they would be bound in to the IVA and would have to forgo the benefit of the charging order.
Possibly your IP should have considered an interim order which would have stopped the proceedings going any further but that depends on the stage it had reached when you first started talking to them.
To be honest, thats's now history and the most important thing is for your IP to contact A&L to see whether a separate deal can be thrashed out.

[Storm]

Not sure but I am fairly sure this was a final order .....

If the order is final and the charge is in place does this take A&L out of the IVA which could have an impact on the return ?? both in terms of the overal unsecured debt level but any potential year 4 equity release.

Would the IP not simply make an Application to the court to agree a payment ?? that way binding A&L legally - providing the payments were made A&L could take no further action until the house is sold.

[catullus]

To the extent that A&L now have secured status based on the value of the house, yes it does take them out of the IVA but they will require a payment to service the debt; if there is still an unsecured balance of their debt because the equity left in the house isn't enough to fully secure their debt, no it won't.
The fact is , however, that you will have to offer some form of payment (the interest on the debt?) to A&L to stop the debt further eroding any equity there is and to stop A&L seeking a sale of the house,very unlikely they will get it, mind. Problem is, however, that will change your disposable income and probably will lead to you having to re-present an alternative IVA to your creditors.
There isn't anything that the IP can do at this stage to limit the powers that A & L now have through the charging order other than to negotiate a monthly payment to them through an IVA, provided the other creditors approve the IVA.
As I said earlier this is a complicated area and its probably best to speak to your IP to understand how he sees it.

[Storm]

Andrea will need to speak to her IP......

I was simply wondering if it made her proposal stronger or weaker.....

[catullus]

Difficult to say without knowing more about the proposed IVA but because its likely to squeeze whatever disposable income is available, I don't think that it makes life any easier!

[Adrian Ratcliffe]

Hi catullus,
I hope you have thick enough skin to to answer this as I wouldn't ask Melanie.
I have been told several times that to be an IP is rather like the old days (old school) back slapping network and IVA's have been generated to fill a nieche market would you tell the forum your salary
fees my IVA are estimated at £8,000 out of this what % would you expect personally as an IP ?
I ask this question in the context of transparancy
Regards
Adrian

[catullus]

not sure what you are asking.
currently advertised salaries for IP's working in the personal insolvency field vary from between £50k to £100k, how much he gets out of each IVA would be impossible to measure.
If you own your own practice you might earn much more than this, or much less, depending on how succesful your practice is.
Does that answer your question?
IVA's came about because,before them, the only option was bankruptcy and the government brought the procedure in because there was a glaring need for a half way house. When originally introduced it was mainly envidaged that they would be used by the self employed but with growing consumer debt they have been used increasingly for Joe Public.

[Adam Davies]

Hi
Just going back to the original post i,m sure that I read on the forum that a charging order was invalid if the creditor had notice of an IVA proposal ?
Surely if it is now a secured debt A+L are no longer part of the IVA.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp