Charging
Orders – What you need to know
To
keep up payments on bills or debts, loans can be one of the few choices.
If you borrow money without collateral, this is known as an ‘unsecured
loan’. This is because the lender has not secured the loan itself
directly to the value in the person's home.
With
a ‘secured loan’ the lender can push for the sale of the borrower’s
house if they fail to provide the required payments or they default on the
loan. For individuals it is favourable to get an unsecured loan over a
secured loan for evident reasons.
In
certain instances the lender may try to get a charging order against the
home to guarantee their money. From the lender’s perspective this is a
long procedure and is not frequently used. Saying that, it occurs and the
consequences for borrowers if they can’t keep up with payments are
considerable and can result in repossession of their property.
It is
not only properties that a charging order or 'charge' can extend to. If
the borrower has other funds or perhaps owns stocks and shares, a court
can reclaim the owed sum through these funds as well as the property
itself. While there is a charge against a borrower they can only recover
any money from the sale of a property after any remaining money owed is
paid back to the lender.
Basically,
as a consequence of the charge, the borrower is not the priority for
receipt of any money from the sale of their residence. If there is a
mortgage outstanding, that will generally be paid earliest, then the
charging order will be paid, then the solicitors fees and, if they are
engaged, any estate agent fees. Following this there is also stamp duty to
consider so there can be a significant loss of finance when it comes to
the borrower’s turn to receive payment.
Law
courts are authorised to grant charging orders. If a borrower doesn’t
make payments or a number of payments as agreed in their contract then it
is expected the lender will seek a charging order. For a charging order to
be implemented a loan company must have a hearing in a county court.
The
county court will think about a number of things including; personal
situation of the consumer, how the charging order will impact other
creditors and also whether the borrower is disabled or suffers from a
health problem.
The
borrower can request that the court come up with a payment plan that takes
into account their present and future financial situation, if the court
has decided to enforce the order. The borrower can make payments from
their wages if they are employed and the arrangement won’t influence
their employment.
Consult
an online comparison site like The Motley Fool’s Loan
Comparison Centre if you wish to take out an unsecured loan. Amongst
the most competitive presently on the market are the Alliance
& Leicester personal loan and Moneyback
bank personal loan with APR rates of 6.5% and 6.3% respectively, also
worth considering is the award winning Unsecured
Loan from Asda which has a typical 6.9% APR. An Alliance
& Leicester secured loan also emerges as a fine selection for
those considering a Homeowner loan with an impressive 7.9% APR.
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