They assure me that I need not worry and that, should I decide to sell, they will still be entitled to receive payment from the proceeds. Should I be doing anything? CS.
Myra Butterworth, a MailOnline property expert, responds: I’m sorry to hear that you have a judgment against you.
Although it’s a challenging situation to be in, you should be aware of the potential consequences, including being forced to leave your property.
We discuss what a creditor is likely to do and how best to respond with a legal expert.
But first lets see things through the eyes of creditors generally. A court has mandated that the debtor pay the amount owed by a certain date, sometimes immediately, but the debtor has not complied. This occurs occasionally because they are indifferent, but more frequently it is because they lack the funds and are unable to borrow more.
There is a selection of options open to a creditor to try and extract their money. First is to send in the bailiffs. But does the debtor possess anything valuable enough to be seized, such as a refrigerator or a guide dog?
Additionally, the debtor’s employer may apply to the court for an attachment of earnings order, which would cause a fixed amount to be deducted from the debtor’s pay each week or month and given to the creditor.
However, after meeting basic living expenses, is there anything left over from that pay, and is this order unfeasible due to the debtor’s self-employment or unemployment?
They may also ask the court for a third party debt order, which would direct funds from the debtor’s bank or building society account to the creditor in order to pay off the debt.
However, will the creditor become irritated because they won’t have enough money for that month’s rent, or—more likely—is the account in debit or has five pence worth of credit?
If the debt is for at least £5,000, they may file to have the debtor declared bankrupt. However, that is costly—the debtor may not have any assets or may successfully avoid bankruptcy by arguing that it would be a complete waste of time anyhow. The creditor must pay the court £1,802 to begin the process.
And then there is an application for a charging order. Our interrogator will comprehend why so many informed creditors, including theirs, find this to be such a desirable avenue for settlement.
It can be sought in conjunction with any of the other options we have been looking at. Nearly 19,000 charging orders were made in England and Wales courts in 2021.
By placing the creditor in a position akin to that of a mortgage lender, the order essentially converts an unsecured debt into a secured debt.
It prevents the debtor from selling, mortgaging or remortgaging their property without settling the debt to the creditor. It can be used for anything, including stocks and shares, a house or apartment, or just a piece of land with a shed.
That may be regarded as fair enough. A charging order, however, is sneaky because the creditor may later apply to the court to have the property sold and the debt paid with the proceeds of the sale.
This means that they could ultimately be evicted from the property. Whether that happened would depend on all the circumstances.
The judge would take into account a number of factors, such as the debtor’s actions in paying the creditor in installments following the charging order, the amount owed, and whether the creditor has changed into an aggressive debt collector who buys up debts from the original creditors for pennies on the dollar.
Although a creditor can request a charging order for any amount owed, judges typically need to see at least £200 in debt in order to issue an order.
Since each creditor will receive payment from the proceeds in the same order of priority as they obtained their order, the creditor will have been motivated to apply for the charging order as soon as possible.
The first creditor to receive a charging order might receive their entire amount, leaving nothing for the second creditor in line.
It’s a scary thought: someone putting a charge on your property without your knowledge or consent. While it’s not impossible, it’s highly unlikely and there are steps you can take to protect yourself.
Understanding Property Charges
A charge on your property, sometimes referred to as a lien, is a formal claim made against it that, should you fail to pay the debt, allows the lienholder to obtain payment from the sale of your property. Charges can arise from various sources, including:
- Unpaid taxes: If you haven’t paid your property taxes, the government can put a lien on your property.
- Unpaid homeowner association fees: If you belong to a homeowner’s association and haven’t paid your fees, the association can put a lien on your property.
- Unpaid contractor bills: If you haven’t paid a contractor for work they did on your property, the contractor can put a lien on your property.
- Unpaid judgments: If you’ve lost a lawsuit and haven’t paid the judgment, the judgment creditor can put a lien on your property.
How Can Someone Put a Charge on My Property Without Me Knowing?
Most of the time, notice is given to you before any charges are made against your property. For instance, a tax bill may arrive before a tax lien is filed, and a contractor’s demand letter may arrive before a contractor’s lien is filed.
However, there are some situations where you might not receive notice, such as:
- The lienholder doesn’t have your correct contact information.
- The lienholder is trying to defraud you.
- The lien is placed as part of a legal proceeding, such as a divorce or bankruptcy.
How to Protect Yourself from Unwanted Charges
There are several things you can do to protect yourself from unwanted charges on your property:
- Stay on top of your bills and payments. This is the best way to prevent liens from being placed on your property in the first place.
- Check your credit report regularly. Your credit report will show any liens that have been placed on your property. You can get a free credit report from each of the three major credit bureaus once a year at AnnualCreditReport.com.
- Monitor your property title. You can do this by ordering a title search from a title company. A title search will show any liens or other encumbrances that have been recorded against your property.
- Be wary of unsolicited offers. If you receive an offer from someone who wants to buy your property or put a lien on it, be sure to do your research before you agree to anything.
What to Do If You Find a Charge on Your Property
If you discover a charge on your property that you didn’t know about, don’t panic. There are steps you can take to resolve the issue:
- Contact the lienholder. Find out why the lien was placed and what you need to do to remove it.
- Negotiate with the lienholder. You may be able to negotiate a payment plan or settle the debt for less than the full amount.
- File a lawsuit to challenge the lien. This should be a last resort, as it can be expensive and time-consuming.
While it’s possible for someone to put a charge on your property without your knowledge, it’s highly unlikely. By staying on top of your bills, monitoring your credit report and property title, and being wary of unsolicited offers, you can protect yourself from this happening. If you do discover a charge on your property, don’t panic. Contact the lienholder and take steps to resolve the issue.
How can they oppose a charging order?
Our questioner would be better off without, rather than with, a charging order. They can inform the court that they oppose the application as soon as they learn that an interim order, a temporary decree, has been made.
Then, they must appear at the hearing and submit a written statement outlining their objections to the creditor and the court in advance.
If the debtor has already begun to pay off what is owed, or if the property is in negative equity (the outstanding mortgage exceeds its value), the court may not make the order final.
In the event that the judgment debt is paid in installments at the rate of £x per month or at any other rate the court may from time to time specify, the debtor may ask the judge to order that the creditor be prohibited from requesting that the property be sold, even after the order is made final.
It would be acceptable for our questioner to offer the creditor a lump sum payment in full and final settlement if they could borrow money from friends or family in the amount that was owed—it might be significantly less. It might be favoured on a bird in the hand basis.
An important point on interest. In most cases, simple interest will be charged on judgment debts totaling at least £5,000, starting from the date of the judgment and continuing until settlement.
However, the creditor’s right to interest may terminate if they take action to enforce the judgment in county court.
Interest will cease upon surrendering the bailiff or requesting that the debtor be questioned about their finances, provided that this generates some revenue. No interest will be clocked up during the lifetime of an attachment of earnings order. But an application for a charging order will not stop interest.
How do I know if I have a lien attached to my property?
FAQ
What is it called when someone enters your house without permission?
How do you find out if there is a charge on my property UK?
How much does it cost to put a charge on a property UK?
Is it illegal to enter someone’s house without permission UK?
Can a person sell a house without permission?
Let Us Help You It is possible for a house owned by one person to sell without his or her permission by another that does not own the property with any legal claim, and this is often considered a crime. In these situations, it is possible, usually through legal support, to reacquire the house when another uses fraud to steal and sell the property.
What happens if someone sells your house without you knowing?
A: Someone could potentially sell your house without you knowing by committing identity theft, forgery, or using fraudulent documents. Additionally, cybercrime could be used to access confidential information about the property. These actions are illegal and can result in severe criminal penalties if caught.
Can you sell a house without the owner’s knowledge?
A: No, it is not possible to sell a property without the owner’s knowledge. Before a sale can be finalized, an appraisal of the property must be conducted and typically a realtor is involved in the negotiation process. Can Someone Sell My House Without Me Knowing.
Can a person reacquire a house if someone steals?
In these situations, it is possible, usually through legal support, to reacquire the house when another uses fraud to steal and sell the property. There are times when a person will discover that his or her house is no longer in possession due to instances of fraud.