Did you know that creditors can enforce a County Court Judgment in case you owe them money?
Yes, they can apply for a charging order if you do not repay your debts. A creditor gets a security for the debt with a Charging Order. This means a debt would be secured, like a mortgage on your house or any other property. However, before a Charging Order is made, there will be a court hearing and you can stop a Charging Order with various arguments.
But first you should know when a creditor may apply for a Charging Order?
- A Charging Order can be applied by a creditor only when a CCJ is issued against you.
- A Charging Order can be enforced only when you have been unable to pay the debt immediately or on the said date. This is also called a “forthwith judgment”.
- A Charging Order can be enforced if you missed one or more payments as ordered by the court.
How to stop a Charging Order?
The court decides whether to make a Charging Order (under The Charging Orders Act 1979) or not. The following needs to be considered before the order is made. The financial situation of the debtor has to be considered. The court has to make a right decision considering the fact that other creditors are not harmed. Many situations are considered before issuing a Charging Order. Check out these:
- In case anyone in your family is seriously sick or is disabled
- If you can show that you are already into a payment arrangement scheme with your other creditors, the order can be stopped.
- According to the rules set by Charging Order, your creditors require to inform all the other creditors regarding an Interim Charging Order. So if this is not the case, an order can be ceased.
- Was there any possibility for your creditor to offer a secured loan when you got your first loan? However if they gave you unsecured loan, then your other unsecured creditors can be threatened by a Charging Order. This can cease the order.
- You can also postpone the Charging Order by asking the court for an instalment order or an attachment of earnings order.
- There is another way out of a Charging Order. It is Time Order. This can be applied by debtors only if their debts are covered by the Consumer Credit Act. This will change you monthly payments and give you more time to clear your debts.
- You can also stop a Charging Order if your total debt amount is less than £5,000 to all your creditors. You can ask the court to include your debts under an administration order.
- In case you are on the verge of being made bankrupt, you can argue that a Charging Order can give the creditor an unfair advantage over other creditors.
- A Charging Order can be prevented in case your home is worth less than your mortgage or negative equity. In this situation, the creditor does not get paid even if the house is forced to be sold.
- If a Charging Order forces you to sell your home, you can raise an objection pointing out the crisis of your family. This can be done if the debt is in your name but home is jointly own
We will recommend you to talk to a legal adviser who can offer you the best solution depending on your situation.
