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Interim charging order on bankrupts property
I am owed £64,000 from a debtor. I obtained an interim charging order on their property but the debtor filed for their own bankruptcy 3 days after I obtained the interim C/O. The debtor has done this in an obvious attempt to frustrate the final charge with the hearing for this due to be held soon.
I have been told by someone that I should still attend the final charge hearing as the judge may find in my favour, as it is not uncommon for interim charging orders to be made 'final' even after the debtors bankruptcy.
Does anybody here have any first hand experience of something similar?
I have been told by someone that I should still attend the final charge hearing as the judge may find in my favour, as it is not uncommon for interim charging orders to be made 'final' even after the debtors bankruptcy.
Does anybody here have any first hand experience of something similar?
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You won't like this but as bankruptcy will mean that any assets, and in this case the house will be an asset, will be sold to realise funds to pay creditors, they only issue here is that if the debtor owes money to lots of people you may not get all you are owed back but only a percentage. As this is likely to be the same % as all the other creditors I have to ask why it is you think you should be treated differently to anyone else.
Some 'light reading' for you:
http://www.lawgazette...creditors-and-debtors
http://www.lawgazette...creditors-and-debtors
Yes thank you bednobs, I didn't say anywhere that I should be treated any differently than anybody else.
I have been doing a bit of research regarding interim charging orders and there does appear that there is a discretion for which the judge can use if he see fit. But just to give you a little bit of background about this case, from my understanding, the debtor did not have any other pressing creditors after them nor did they have any other lawsuits pending, so it seems rather strange that they would all of a sudden choose to go bankrupt when they have approx £50,000 equity in their property.
Well when you stop and think about it, its not strange at all because quite simply, the debtor is under the impression that if they made themselves bankrupt, then they wouldn't have to pay me back at all. Well I have been informed that this is not the case at all as the are some tiny loopsholes in the Insolvency Act which the debtor has conveniently over-looked, which will be to my benefit. I managed to track down the lawyer who delt with a similar major case in 2008 and he informed me that I stand a very good chance of getting ALL of my money back. I have read the insolvency act thoroughly from back to front and it does appear that it gives a creditor a chance to fight his corner and that it will all come down to the judges discretion on the day.
I have been doing a bit of research regarding interim charging orders and there does appear that there is a discretion for which the judge can use if he see fit. But just to give you a little bit of background about this case, from my understanding, the debtor did not have any other pressing creditors after them nor did they have any other lawsuits pending, so it seems rather strange that they would all of a sudden choose to go bankrupt when they have approx £50,000 equity in their property.
Well when you stop and think about it, its not strange at all because quite simply, the debtor is under the impression that if they made themselves bankrupt, then they wouldn't have to pay me back at all. Well I have been informed that this is not the case at all as the are some tiny loopsholes in the Insolvency Act which the debtor has conveniently over-looked, which will be to my benefit. I managed to track down the lawyer who delt with a similar major case in 2008 and he informed me that I stand a very good chance of getting ALL of my money back. I have read the insolvency act thoroughly from back to front and it does appear that it gives a creditor a chance to fight his corner and that it will all come down to the judges discretion on the day.
There are 2 separate issues here:
1. If you succeed in getting your charge made final (& I'm not sure whether the judge has discretion to do this) then you are relying on your charge as your security. It is then in the same category as a mortgage if there is one(but ranks behind the mortgage as regards whether you get paid - i.e. if the house is sold the mortgage gets paid off first, & then any remaining funds are for you). This means you do not prove in the bankruptcy for your debt & would have to pursue separate action to try & get an order for sale of the house in order to get paid. The Court may be reluctant to grant such an order, especially if there are children living in the house. The equity in the house would be for the mortgage lender & for you, rather than for any unsecured creditors - who would only get any if there was some left over after you had been paid in full.
2. If you do not get a final charging order then you prove in the bankruptcy for your debt. What you get then depends on how much money there is in the bankrupt's estate (including any equity in the house) & what are the total of his debts. The first call on any money would be the Insolvency Service's costs (& costs of any Insolvency Practitioner if the Official Receiver decides to appoint one). What is left is then distributed to creditors pro-rata to the amount owed to them. This process can take a long time & the costs can be heavy. Also, it is not certain that the house would be sold - at least not for some long time - which would put any payments off into the - perhaps distant - future unless there is a lot of money other than the equity.
1. If you succeed in getting your charge made final (& I'm not sure whether the judge has discretion to do this) then you are relying on your charge as your security. It is then in the same category as a mortgage if there is one(but ranks behind the mortgage as regards whether you get paid - i.e. if the house is sold the mortgage gets paid off first, & then any remaining funds are for you). This means you do not prove in the bankruptcy for your debt & would have to pursue separate action to try & get an order for sale of the house in order to get paid. The Court may be reluctant to grant such an order, especially if there are children living in the house. The equity in the house would be for the mortgage lender & for you, rather than for any unsecured creditors - who would only get any if there was some left over after you had been paid in full.
2. If you do not get a final charging order then you prove in the bankruptcy for your debt. What you get then depends on how much money there is in the bankrupt's estate (including any equity in the house) & what are the total of his debts. The first call on any money would be the Insolvency Service's costs (& costs of any Insolvency Practitioner if the Official Receiver decides to appoint one). What is left is then distributed to creditors pro-rata to the amount owed to them. This process can take a long time & the costs can be heavy. Also, it is not certain that the house would be sold - at least not for some long time - which would put any payments off into the - perhaps distant - future unless there is a lot of money other than the equity.
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