What is an Interim Charging Order

On July 9, 2011, in News, by Lewis Alexander

What are Interim Charging Orders, can anyone STOP an Interim Charging Order being placed against a house, home or property?

  • free credit report UK from ExperianWith changing times, come changing practices and the world of money lending is no different.
  • Here, the specific practice of placing an Interim Charging Order on a home is becoming increasingly common.

In order to answer whether charging orders are a necessary evil or a little over the top, we first need to explore exactly what a charging order is, when a charging order is applied for and what interim charging orders actually mean for the person impacted by the order.

  • So what are charging orders?

Well, put simply an interim charging order comes about when a money lender / creditor has a customer that has defaulted on their debt and in order to ensure that they (the creditor) gets repaid, they apply to the court for a charging order against the customer’s / debtors home, meaning that when and if the home is sold, any spare equity (after the mortgage on the property is repaid in full) is used to pay off the money claimed on the interim charging order.

In fact, charging orders are a way for lenders to protect themselves against customers failing to honour defaulted accounts, instead of simply selling the debt off to debt collection agencies at much reduced rates.  For example, large lenders will often sell debt.  Meaning that if you had a 10p in the £pound sell off, if a customer owed £1000, the lender would receive £100 from the debt collection agency that would now effectively own the debt.

This obviously results in a large loss and more recently has been accompanied by considerable negative publicity, owing to the sometimes ‘law stretching’ techniques that debt collection agencies, creditors and their respective solicitors employ.

  • So, the switch to looking to secure a charging order is seen to be both loss-limiting and more ‘customer friendly’.
  • Whether this is in fact true is a matter for great debate!

Charging orders should only be applied for when the customer has in effect stopped making repayments, has not contacted the lender to let them know of any change in circumstance and so has become an ‘absentee debtor’ i.e. they are not contactable.  At this point, it is acceptable for a lender to apply to the court to secure a charge over a debtors’ property. If you are not a home owner, a creditor cannot apply to have a charging order placed against a home you may be renting off of another person or authority.

However, in practice there are increasing numbers of cases up and down the country that are seeing charging orders applied for when customers have just started to experience difficulties with making their repayments.  In some cases, customers have made reasonable offers to continue with repayments which are rejected by the lender, who continue with applications for charging orders.

A charging order can only be applied for once a court order or CCJ is in place, one comes after the other and it is the pro active approach to forcing CCJ’s or county court judgements against defaulted clients who are home owners that is a massive concern. If a debtor has NOT failed to contact their lender and has in fact explained their change in circumstance and offered an affordable and reasonable repayment plan, it would not be thought of as treating the customer fairly to push a CCJ through a court to enable them later to apply an interim charging order!

In most cases this can be successfully defended against in court by making a clear case that this is unfair.  Indeed, one of the coalition promises back in May 2010 was that they would seek to prevent unscrupulous lenders from placing charging orders for small outstanding balances.  By making a clear case for why selling your home would cause difficulties for you and would further place your family finances in peril, the original court order/CCJ or county court judgement should not be approved by the court.

  • If however, this all seems too much, here at Lewis Alexander we are able to offer a helping hand.
  • Call us today on 0800 018 6868 and we can start to work with you to agree a repayment strategy, which may help stave off a creditor placing an interim charging order on your home.
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In Debt

On July 6, 2011, in News, by Lewis Alexander

Are you struggling in debt and need to find a way out?free credit report UK from Experian

  • No one means or plans to be in personal debt!
  • It’s just one of those things that kind of creeps up on us most certainly after a change in personal circumstance.

By the time you’ve got that new car on the drive, the top of the range kitchen and the flash summer holiday, it’s no surprise that the UK’s average wage of £22k a year simply isn’t enough!

According to latest figures, the average amount of personal debt each person in the UK owes is approximately £15,000. This means that in many cases £15k would be seen as a walk in the park as debt levels of around £30k-£50k are not uncommon.

At the heart of the issue is the fact that it had become generally accepted that it was possible and indeed accepted to ‘live beyond your means’. The fact remains that even slipping into debt for a short period of time can soon spiral out of control with monthly payments creeping well in excess of monthly take home pay!

  • Once you’ve reached this point the focus switches to managing monthly payments rather than reducing the underlying personal debt.

Let’s take Mike and Claire. A young couple with two children a £150k mortgage and combined household income of £35k.  Mike and Claire typify what Nick Clegg refers to as ‘Alarm Clock Britain’.  They take home £2000 a month but with mortgage, household bills and food shopping alone taking £1500 away, it’s not long before clothes for the kids, Pizza Friday and Bob the dog’s pet food account takes up the rest!

So they put the summer holiday on a credit card, spent a bit on the house, bought a new car and before they knew it had racked up £20k in personal unsecured debt.

Easily done, but the net effect is an endless cycle of earning just to make the monthly re-payments.  The spare £500 a month soon becomes insufficient to cover the minimum payments on that £20k and poor old Bob is going a bit hungry!

The easiest and simplest way to reduce your debt is to spend less. This sounds obvious but is easier said than done. Unless you can suddenly find a lump sum to pay debts off, the only way you’re going to decrease the balance is by paying off more than you spend or by marginally increasing your income.

In Mike and Claire’s case reducing their spending is going to be pretty hard as there really isn’t a lot spare but maybe Free view TV instead of popular subscriber options such as Sky or Virgin and other cable TV, shopping around for better utility rates might help?

To increase income they could eBay some of that junk in the loft, see if some overtime is available or maybe try and earn some extra through a small part time job.

  • Alongside these approaches it is also useful to shop around to see if there are lower interest deals, or 0% interest offers that they can benefit from.
  • Credit card companies are fighting for our business, and if you find the deal that is right for you then even 6 months without interest can make a big difference in helping you turn your finances round.
  • It may help to think of this as a part-time job.

As Director of Family Finances you should always be on the lookout for special offers, new deals and trying to coordinate them so you’re always best placed to reduce your family’s debt or increase savings.

By regularly comparing all your credit cards’ interest rates and transferring balances away from the cards with the higher rates can be a great option.  Second, think about simply calling the credit card company who has the higher rate. As credit card companies are under pressure to retain customers you may find that you can get a better deal simply by asking for one, particularly if you can quote a competitor’s deal when you call!

Think of it like the “lowest price guarantee” that most stores offer.  Setting up an automatic payment through your bank is another way of reducing your credit card debt more effectively.

  • Maybe repaying debt instead of buying more shoes is the answer after all?

If none of these techniques are doing the job and you are fed up of being in debt then it may be time to get in touch with Lewis Alexander Financial Management. One of our personal debt specialists may be able to help you reduce your personal debt by understanding your individual circumstances.

  • Call us FREE today from a land line using 0800 018 6868 and you may be able to start your journey to clear debt that is holding you back.
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free credit report UK from Experian Are you struggling with money worries or debt problems?

  • Do you and your partner argue about finances or bills in the home?
  • Would your home or personal life benefit from an organised financial life?

It could be argued that deciding how to spend one’s income in the modern world is tough enough.  A variety of technologies and gadgets, sporting pursuits, ‘keeping up with the Jones’ or good old fashioned hobbies, all increasingly compete for our disposable income / money.  But when you add your other half in to the mix, decisions and divisions on how to spend the combined income can be a recipe for disaster!

  • According to recent research, the male of the species are less concerned about saving money either for emergencies or just a rainy day and prefer to spend what is available, or risk greater returns with riskier investments.

Women on the other hand prefer to use spare cash as a security blanket to insulate any unforeseen circumstances.  It is this trend that means women gravitate toward safer and more traditional savings plans and rather than risk their hard earned cash in a range of lavish purchases or riskier investments.

Then we add into this mixture the ‘ego’ factor of men traditionally adopting the role of breadwinner.  Whilst less important since the turn of the century, many men still feel more comfortable in the role of ‘provider’ for the family.  As a result, any monetary or debt problems are more likely to be hidden from their family by way of protecting them against harm.

This view is supported by a recent study conducted by ITV show ‘Loose Women’ which concluded that most household arguments about money and debt were caused by the husband or boyfriend’s perceived lack of caution. As men and women have very different views on money, these different needs, wants and views can cause disagreements, where the couples were previously happy.

Whilst different views can cause arguments, the real ignition of rows about money tend to stem from the failure to address and deal with financial problems.  Kim Stephenson, an expert on the subject of debt-related depression, psychologist and creator of money website ‘Taming the Pound’, has conducted a considerable research proving that debt and money troubles act as a major trigger of depression.

  • “Debt or money worries are the biggest reason for couples to consult [couples therapy]. Debt or money worries usually rank third or higher in any ranking of reasons for people seeking treatment for depression or anxiety,”

Kim Stephenson’s comments are also reflected in figures obtained by the BBC, which reveal prescriptions for anti-depressants have risen by more than 40 per cent over the last four years.  Doctors and charities have also said they are being contacted more and more by people struggling with money worries and personal debt problems.

  • “Given that millions of days are lost each year to illness, depression is a major illness and money worries are a major cause of general distress, which may contribute to depression.”

In summary, the worst thing to do about money problems or financial problems is to bury your head in the sand.  Talking to your partner should be the starting point in sorting these issues and worries out and after that if you want to discuss your personal circumstances further why not get in touch with our personal debt specialists.

  • Our free phone helpline is free to call from UK land lines.
  • One call to 0800 018 6868 could be the best call you make to find a solution to clear debts!
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