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Credit Repair- Charging Orders In the County Court

DEFINITION OF A CHARGING ORDER Charging orders are filed at the courts by a creditor in order to secure a money judgement ordering the debtor to repay what he owes. Whenever a charging order is filed, it automatically acts as a safeguard for the debt. That is to say, it becomes a “security” for the debt, much as a mortgage acts as a security for the house or the land. Before a charging order can be issued, a hearing must take place in court. There are several ways to can prevent a charging order from coming into being. In this report, you will find a description of country court procedures on charging orders, and the steps you can take when creditors file a petition to serve you with a charging order after suing you in High Court.

This report will tell you what to do if you suspect a charging order has been filed against you and you are unsure of the next move you should make. A CREDITOR CAN PETITION THE COURTS FOR A CHARGING ORDER WHEN… There are two instances when a creditor can request the court to issue a charging order. One of these is when they already have a county court decision against the you, the debtor, where you are compelled by the court to pay the debt in what is known as a “forthwith” judgement. This means payment of the debt must be made in full straight away, or at a particular date set by the court. Another case is when there is a previous judgement against you for payment of the debt in instalments, and you have defaulted on one or more of them.

However, if you are currently paying your debt in instalments as ordered by the court, and you have not missed a single one, the court cannot issue a charging order. This is based on the decision in the 1997 landmark case of Mercantile Credit Co Ltd versus Ellis involving debt payments and charging orders. THE PROCEDURE FOR FILING A CHARGING ORDER APPLICATION There are two stages in the filing of an application for a charging order: FIRST STAGE: THE INTERIM CHARGING ORDER Whenever a creditor applies for the issuance of a charging order against you, the court shall first establish that you partly own or have an interest in the property that is the subject of the charging order. After ascertaining this fact, the court shall release an interim charging order. Please note that this is NOT the final charging order itself. The court can give this order, with a duplicate sent to you, even without a hearing. A date is then set for a full hearing after the interim order has been issued. After approximately 21 days, the District Judge should be able to set the hearing to decide on the the issue of whether to make the interim charging order permanent or final. This hearing normally takes place within the private rooms of the District Judge. Apart from this, the Land Registry will be furnished with a copy of the interim charging order against you.

This will serve as a “caution” on your property preventing you from disposing of it prior to the hearing. The Land Registry will likewise inform you of this “caution” in writing. SECOND STAGE: WHEN THE CHARGING ORDER BECOMES FINAL At this point, a hearing is set before the District Judge, and the court is tasked to decide whether or not the interim charging order should be made final on the property in question. This is also known as the final charging order. Any objections you might have against the final charging order should be set in writing and sent to both the court and the creditor at least 7 days before the hearing. The objection letter must be sent through registered mail and should state all of your reasons and present evidence of why a final charging order should not be issued against you and your property. Sending a letter of objection to the creditor and the courts will allow your explanation to be taken into consideration during the hearing presided over by the District Judge. It is important that you attend the hearing, even if you have sent a written objection. It is even more important for you to be present if you have not submitted any written evidence at all. The court has the discretion to withhold the charging order, which is why it is necessary for you to serve notice that you will be attending the hearing.

If the hearing date is inconvenient for you, you must immediately inform the court so another date can be set. Absenting yourself from the hearing may have a negative impact on your case, as the court can rule in favour of the creditor by making the charging order final and irrevocable. If the reason you cannot attend a hearing is because it has been filed in another court, you have every right to request that it be heard at a court within your area. There is a form required for this called the N244 application which, for a fee, allows you to fill out your reasons for the transfer, be it the travel time involved, the considerable distance, or the costs you are likely to incur for childcare. HALTING A CHARGING ORDER IN ITS TRACKS The court has the responsibility to decide whether or not to issue the charging order. Based on The Charging Orders Act of 1979, there are several considerations that the court has to look into before making its final decision. Among these conditions are: 1.) The “debtor's” personal situation The court has to take into consideration that you may have other creditors whose rights may be prejudiced with the issuance of a charging order. This means the court will have to look into your personal circumstances - your other outstanding debts, your mortgage, any equity on your house, and if you have sole or joint ownership of your home – before making its decision. Assuming you have quite a number of outstanding debts with several creditors, issuing a charging order in favour of one creditor will unduly prejudice the rights of the others.

It may be a good idea to show evidence that you already have a payment schedule in place with your other creditors to forestall the charging order from being released. It would be an advantage on your part to present a summary of your debts, including the amount of each, and whether some of the creditors have held out on interest charges. In like manner, one of the requirements of the creditor in the filing of a charging order is to include a list of all the other creditors that he is aware you have. Although creditors may be furnished a copy of the interim order to give them a chance to protest its issuance during the hearing, the court is not obligated to supply them with one. This means that your other creditors are unlikely to be aware of the interim order hearing. If you feel that one or more of them may be “unduly prejudiced” by the charging order, you may include this argument in your written objections, as well. Loan security can also be used as an argument. Whether or not your creditor offered you a secured or an unsecured loan may have an impact on the rights of your other unsecured creditors if a charging order is issued. You can also request the court for an instalment order to enable you to pay the debt in affordable monthly instalments.


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