I have had judgement order made against me for inexcess of 60K for mortgage shortfall. Is it correct that a SECOND CHARGE can be put on the property i now live in? If this is so, what should i do now?

-- Daren Otsay (darenotsay@blueyonder.co.uk), January 10, 2002

Answers

Correct me if I am wrong, but it seems you had a property which you subsequently left, and after an interval, you obtained a mortgage on a second property which has the usual mortgage charge over it. The first lot then caught up with you for the shortfall, sued you, won, and now want paying.

If they want a Charging Order over the property, with or without you paying a monthly sum - do accept this. A Charging order will claw any money off the sale to the limit of the debt if there is any excess after release of the original mortgage.

A Charging order is however a prelude in most cases to obtaining an order for sale and consequent dispossession - a lot depends on the amount of equity in the property and its worth as to whether a court will grant a sale order.

Your best hope is that they simply want to use the Charging Order as a means of hanging a sword over your head to ensure monthly payments, in default of which they would seek possession and sale in the same way as your current mortgagees would if you did not pay your monthly instalment. It might be a good idea to approach your former lender's solicitors with a view to a payment arrangement or, if you can do it, a lump sum settlement, before it gets to them proceeding with the CO which will add greatly to the costs which you will ultimately have to pay.

-- David J. Button (davidjohnbutton@supanet.com), January 10, 2002.

Hi David, thanks for the information. As for the property i now live it is a joint mortgage with my now new partner so surely my partner has rights to the property as my judgement order has absolutley nothing to do with her?

-- Daren Otsay (darenotsay@blueyonder.co.uk), January 10, 2002.

Yes, but in order to realise your share of the property, one of two things would have to happen, either she would have to buy out your share, or the house would have to be sold and the proceeds split and your share applied to your debts.

A house held in joint names is still not safe as an order for sale can still be made though your partner's share cannot be held towards your debts.

I think you need to be speaking urgently to solicitor about preserving as much as possible your partner's equity in the property particularly given the impending charging order.

-- David J. Button (davidjohnbutton@supanet.com), January 10, 2002.

I was in excatly the same boat as you, went & seeked advice from solicitor as saw no reason why my new partner should loose out & anyway why should someone who is nothing to do with it be made to sell their house to cover someone elses debt, especially as your partner may not wish to move it is as if they are being forced to. Solicitor i saw basically stated same as man above has. I was advised to sign complete house over to partner for nothing & sign a declaration to confirm that no monies had passed hands. However you must work fast as once they apply for a charging order & whilst your name remains on the papers at the land registry you are stuck suggest you get solicitor to work fast & get your name removed. They cannot put a charging order on a property which your name is not against.

-- gillian (gillwheeler@aol.com), January 11, 2002.

Very odd advice from a solictor imho..if you sign a property over for nothing specifically to avoid a lien/debt/charging order, it can be set aside as it was to a person "not at arm's length" and not for "fair market value". Careful careful.

-- Too scared to say (iwasduped@yahoo.com), January 11, 2002.