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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 if you wish to take out an unsecured loan.



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