In our experience, a large proportion of debtors who are aware that a charging order has been placed on a property take the view that that is a sufficient resolution for the council and therefore make no further effort to repay the debt. Or, they take the view that the council will or ought to be satisfied and that the debt will be repaid when the property is subsequently remortgaged or sold.

Order for sale proceedings therefore become necessary in a large proportion of cases to make it clear to debtors that repayment proposals are required, rather than being an exercise in simply repossessing properties.

Legal Position

The formal position in accordance with current case law is that the court must balance the right of a debtor to live in his or her home with the right of the creditor to be repaid money it is owed from an asset belonging to the creditor. If a creditor can demonstrate to the court that there is sufficient equity in the property to repay the debt, then it is very difficult for a court not to make an order for sale. However, it may be that the order is conditional, e.g.

• an order suspended on condition of timely payment of monthly instalments;
• a suspended order pending a future event such as the youngest child turning 18.

It is therefore possible to obtain an order for sale in most if not all cases, albeit that conditions may be applied to it.

Usual Outcomes

The process of obtaining an order for sale is set out below. The reality of commencing this process is that settlement is achieved in a high proportion of cases. This may either be repayment by instalments, an acceptable lump sum or the full debt balance. In other words, it is extremely rare for any property to actually be sold.

We act for a number of councils who operate a policy whereby order for sale proceedings are commenced on any unpaid charging orders (subject to there being sufficient equity) but that the process is stopped prior to eviction if the property is occupied by the debtor and/or his or her family. The process is used to obtain acceptable repayment proposals, and the policy only allows for the property to be sold if it is either unoccupied or not occupied by the debtor (e.g. occupied by a tenant).

Process

See below.

Opportunities to Pay

It will be noted from the above process that there are numerous opportunities for the debtor to get in touch and make acceptable repayment proposals prior to the property actually being sold.

Costs

We carry out this work on a “no recovery no fee” basis. In other words, if there is no recovery for whatever reason, the costs are written off and the council is only liable for the disbursements incurred.

All costs are added to the debt and recovered from the debtor where possible. Care is taken to ensure that the costs are reasonable, so that the debt itself is the priority.

You will be given online access to our case management system, which enables you to review progress on each individual case at all times. We also send out a monthly report on all cases showing progress, costs, recoveries, etc.

Summary

The purpose of the exercise to get historic debts, secured by charging order, repaid. Not to throw people out of their homes. Repossession is actually very rare. Empty homes can be returned to use.

If you are interested in discussing a potential project, please do not hesitate to contact Richard Kerr: 0333 200 5225 or Richard.kerr@greenhalghkerr.com.