Paying off charging order/restriction & transfer of equity

[Amethyst]

Just going through this, you do have the issue that there is a Court Judgment against you for the full debt, and of course that is secured by the charging order ( restriction ).....so they may be happy to keep the £50 a month steady income ( or even come back and ask to reassess your financial circumstances to increase the monthly amount ) until such time as the property is sold. I'm not sure how much you are thinking of offering, or what the current balance owed is, if it was £18k originally then should be about £12k remaining? (10 years old?) (and unless there is interest added of course).

It can't go back onto your credit file now, the default marker has long since fallen off, and the CCJ has come off the register ( still exists but doesn't affect your credit file any more ) so the last thing you want is them adding anything back to your credit file.

I have changed it to pro-rata as well, I don't know if you do have any other debts.... and realise you are only bothered about getting this one settled off, however if the creditor thinks that your limited surprise lump sum of money is being split evenly across creditors and if they don't accept it will be simply spread out across others, they may be more inclined to accept. Again they may come back asking for a new income and expenditure sheet to potentially increase your monthly payment ( as you no longer have the other creditors to allocate payments to monthly ).

There's no right way to go about it with partial settlements I'm afraid. Your first offer is unlikely to be accepted in any event.

You may be well advised to have a chat with Stepchange or CAB on what approach they would advise you to take ( as you'd be able to discuss your overall circs and any other debts with them so they could take that into account in advising you )

Oh I took out penny v cole too - no point GIVING them an argument to use lol.

To get around that you would have to get someone else ( a third party) to make the settlement offer and make the payment, but I don't like doing that unless it is the truth as it can just come back to bite you later.







Dear Sirs

Your client: xxxxx
Account number: xxxxx
Your ref: xxxxx

I write with reference to the outstanding balance on the above account and would like to make an offer to resolve the matter.

I am in a position where I have a sum of money available which I intend to use to settle my debts on a pro-rata basis. I wish to offer the amount of £xxxxx as payment in full and final settlement of the above account. This offer is made on the clear understanding that, if accepted, neither you, nor any associate company will take any other action to enforce or pursue this debt in any way whatsoever, that I will be released from any liability and that you will notify the Land Registry that the balance on the account has been paid in full and that the restriction placed against xxaddressxxx should be removed.

May I draw to your attention that there is modest equity in the property, and the property is mortgaged on an interest only basis. Therefore the capital owed has been and will be constant for the foreseeable future. The restriction placed upon the title deeds brings the property into significant negative equity, therefore I believe it is in your best interest to consider this offer.

Payment can be made within 14 days of receiving your written acceptance of my offer detailed above.

Should you not accept I will reallocate the fund to those creditors that accept a full and final settlement offer, and my offer to you will be withdrawn, the funds will no longer be available to settle this account and I shall continue making the agreed payments of £50 per calendar month until such time as the debt is extinguished.

I look forward to your response within 14 days.

Yours faithfully,

Xxxxx

[exa3z]

Hi Amethyst, many thanks for taking the time to look at this.

Just going through this, you do have the issue that there is a Court Judgment against you for the full debt, and of course that is secured by the charging order ( restriction ).....so they may be happy to keep the £50 a month steady income ( or even come back and ask to reassess your financial circumstances to increase the monthly amount ) until such time as the property is sold. I'm not sure how much you are thinking of offering, or what the current balance owed is, if it was £18k originally then should be about £12k remaining? (10 years old?) (and unless there is interest added of course).

The current outstanding balance is 18k. The original was a lot more. See the issue that I'm trying to make aware here is yes, they certainly could reject the offer and I will carry on paying them £50 a month. But the likelihood is, I would be dead before they ever get their money that way. Also like I have tried to explain in my letter, the property is mortgaged on an interest only basis, so for the foreseeable future there will be £109,000 owing on that mortgage, and unless the property value increases quite a bit (which would be their only saviour, and which is unlikely to do so), they will effectively never get their money at all. £109,000 mortgage owed. Property valued at £118,000. That means £9000 equity. The property is jointly held and the charge is against my name only, so they would have access to £4500 equity on my share. For them to get their £18,000 the property would have to increase in value by £32,000, making it market value of £145,000. There is no way on this earth that is going to happen (it's a 2 up 2 down).

For the record, I have access to circa £10,000, and I was going to offer them that in full and final settlement of the account. Understanding the above, it would be very foolish of them to decline it don't you think? Maybe I should explain exactly this in my letter?

It can't go back onto your credit file now, the default marker has long since fallen off, and the CCJ has come off the register ( still exists but doesn't affect your credit file any more ) so the last thing you want is them adding anything back to your credit file.

This is contradictory. So are they able to "add anything back" to my credit file which would negatively affect it?

I have changed it to pro-rata as well, I don't know if you do have any other debts.... and realise you are only bothered about getting this one settled off, however if the creditor thinks that your limited surprise lump sum of money is being split evenly across creditors and if they don't accept it will be simply spread out across others, they may be more inclined to accept. Again they may come back asking for a new income and expenditure sheet to potentially increase your monthly payment ( as you no longer have the other creditors to allocate payments to monthly ).

There's no right way to go about it with partial settlements I'm afraid. Your first offer is unlikely to be accepted in any event.

You may be well advised to have a chat with Stepchange or CAB on what approach they would advise you to take ( as you'd be able to discuss your overall circs and any other debts with them so they could take that into account in advising you )

Oh I took out penny v cole too - no point GIVING them an argument to use lol.

To get around that you would have to get someone else ( a third party) to make the settlement offer and make the payment, but I don't like doing that unless it is the truth as it can just come back to bite you later.







Dear Sirs

Your client: xxxxx
Account number: xxxxx
Your ref: xxxxx

I write with reference to the outstanding balance on the above account and would like to make an offer to resolve the matter.

I am in a position where I have a sum of money available which I intend to use to settle my debts on a pro-rata basis. I wish to offer the amount of £xxxxx as payment in full and final settlement of the above account. This offer is made on the clear understanding that, if accepted, neither you, nor any associate company will take any other action to enforce or pursue this debt in any way whatsoever, that I will be released from any liability and that you will notify the Land Registry that the balance on the account has been paid in full and that the restriction placed against xxaddressxxx should be removed.

May I draw to your attention that there is modest equity in the property, and the property is mortgaged on an interest only basis. Therefore the capital owed has been and will be constant for the foreseeable future. The restriction placed upon the title deeds brings the property into significant negative equity, therefore I believe it is in your best interest to consider this offer.

Payment can be made within 14 days of receiving your written acceptance of my offer detailed above.

Should you not accept I will reallocate the fund to those creditors that accept a full and final settlement offer, and my offer to you will be withdrawn, the funds will no longer be available to settle this account and I shall continue making the agreed payments of £50 per calendar month until such time as the debt is extinguished.

I look forward to your response within 14 days.

Yours faithfully,

Xxxxx

Ok that's great. I would like to iron out the above first before chucking this in the post, so any further advice you could give on the above would be very much appreciated.

Thanks,

[Amethyst]

Re the credit file - no they can't add anything back but your original letter was making it a term of settlement that they mark your credit file ....

You will also make an entry on my credit reference agency file relating to the above account as having been fully satisfied and the current balance and default balance will be set to £0.00 on all credit reference agencies where my account has been recorded.

as it has fallen off already and long beyond 6 years since default there is simply nothing for them to mark as satisfied and you e basically asked them to 'make an entry' .... thus I wouldn't even mention the credit file.

[Amethyst]

The current outstanding balance is 18k. The original was a lot more. See the issue that I'm trying to make aware here is yes, they certainly could reject the offer and I will carry on paying them £50 a month. But the likelihood is, I would be dead before they ever get their money that way.

I agree with you - however some dca's prefer a regular monthly income stream than a lump sum - I know - daft .... yes you would likely be dead with a large whack outstanding - but it's secured on the house - so they'll get it then ( in their minds ).

Im not sure what the original debt was or who holds the judgment and charge but if it's a third party debt purchaser then I might start a settlement offer at £5400 (30%) expecting it to be negotiated up to nearer your £10k.

I don't know your other financial circumstances so if there literally are no other debts other than the mortgage stick with your direct f&f offer but ( because you mentioned making them a priority I'm guessing there are others)so if there are others do some maths to see what pro rata offers across the board using your maximum (£10k) to see how it would work out. Then, if you did have other debts you might be able to get those cleared similarly out of the same sum you were going to throw at this one. Obvs don't do anything until this one is sorted as it IS your priority but if you can show it IS a pro rata offer there's more chance of it being accepted. I hope that makes sense.

[exa3z]

I agree with you - however some dca's prefer a regular monthly income stream than a lump sum - I know - daft .... yes you would likely be dead with a large whack outstanding - but it's secured on the house - so they'll get it then ( in their minds ).

Im not sure what the original debt was or who holds the judgment and charge but if it's a third party debt purchaser then I might start a settlement offer at £5400 (30%) expecting it to be negotiated up to nearer your £10k.

I don't know your other financial circumstances so if there literally are no other debts other than the mortgage stick with your direct f&f offer but ( because you mentioned making them a priority I'm guessing there are others)so if there are others do some maths to see what pro rata offers across the board using your maximum (£10k) to see how it would work out. Then, if you did have other debts you might be able to get those cleared similarly out of the same sum you were going to throw at this one. Obvs don't do anything until this one is sorted as it IS your priority but if you can show it IS a pro rata offer there's more chance of it being accepted. I hope that makes sense.

Hi @Amethyst,

Thanks again for your response. Yes, I fully understand what you're saying.

Unfortunately (or fortunately?) there are other debts yes, but they are unsecured (no charges) so they are not stopping me dealing with what I want to deal with, so I was going to deal with these in a similar fashion afterwards. Can't remember the exact details right now (at work), but i owe MBNA circa £3000, and a failed car higher purchase around £7000. I think both of these were sold to debt collection agencies.

With regards to the 18k, this is still held by NatWest, and was never sold to an agency, and is being managed by their solicitor. If you are saying there is more of a chance of me getting all of this sorted in one lump rather than deal with these (what I call, "minor" debts) later, then maybe it is in my best interest to do this?

Ideally though as you understand, I want to remortgage the property from joint names into my sole name, so i can start paying off the capital, and the restriction on the property is stopping me from doing so, so as you can appreciate, this is my absolute main priority. Apart from that, I couldn't really care less and would happily continue paying them the £50 a month!

I will update this thread with further details later on, but to answer your question, yes there are two other outstanding debts.

Many many thanks for your advice so far, it is very useful. Hopefully I can finally see light at the end of the tunnel now.

Regards,

[Amethyst]

So if you have circa £10k to 'play with' you could ''offer'' 35.7% ish for each debt.

MBNA £3000 - £1071
CAR THING £7000 - £2499
NATWEST £18000 - £6426

So you know you could offer ( and justify pro-rata'ly) £6426 to the Natwest CCJ initially.

You then know you have a bit more to play with if they aren't budging.... and of course if you did want to then ( after the important thing is sorted, confirmed in writing, paid and the restriction removed ) you could look to settle the others lower ( IF you wanted ).... the main thing being you have a calculated, fair, pro-rata figure..that you can back up/justify if needed .....and which ( in my opinion ) is more persuasive than sounding simply desperate to get the charging order removed because they will use that.

Don't worry I completely understand where you are coming from and that you only want to sort/settle the CO - it's just trying to give you the best chance of doing that. As it is still directly owned by the original creditor then it is less likely an offer that low would be accepted, but if you think 'normally' they sell these debts on to DCA's for a fraction ( around 10% ) they'd make more out of you this way than passing it on, so start there and see what response you get.

( by the way, I'm by no means a debt expert/adviser or any such thing so it is just my thoughts )

[exa3z]

So if you have circa £10k to 'play with' you could ''offer'' 35.7% ish for each debt.

MBNA £3000 - £1071
CAR THING £7000 - £2499
NATWEST £18000 - £6426

So you know you could offer ( and justify pro-rata'ly) £6426 to the Natwest CCJ initially.

You then know you have a bit more to play with if they aren't budging.... and of course if you did want to then ( after the important thing is sorted, confirmed in writing, paid and the restriction removed ) you could look to settle the others lower ( IF you wanted ).... the main thing being you have a calculated, fair, pro-rata figure..that you can back up/justify if needed .....and which ( in my opinion ) is more persuasive than sounding simply desperate to get the charging order removed because they will use that.

Don't worry I completely understand where you are coming from and that you only want to sort/settle the CO - it's just trying to give you the best chance of doing that. As it is still directly owned by the original creditor then it is less likely an offer that low would be accepted, but if you think 'normally' they sell these debts on to DCA's for a fraction ( around 10% ) they'd make more out of you this way than passing it on, so start there and see what response you get.

( by the way, I'm by no means a debt expert/adviser or any such thing so it is just my thoughts )

Hi Amethyst, once again, many thanks for your reply.

Ok the figures are not that far off, so MBNA is £2575, Car thing is £7591, so pretty much the same. It's not the case that I only want to settle the CO, my intentions was to always try and settle all of them if possible, but as you understand, my main priority is the CO as that is restricting me from remortgaging the property. I have wasted nearly 10 years of not paying off the capital due to this so I'm sure you understand my intentions.

So as I understand, I would write to the creditor of the CO first, and then upon success, would write to the others? Not all 3 at the same time? What happens if they reject my first offer? If I increase the offer, does it not become unfair on the other creditors then?

Many thanks,

[Amethyst]

Yes but you don't care about the others for the moment.... if you get a good settlement on the CO one you can look at trying to settle the others - you are literally just using the others at the moment to back up / justify the offer.

You'll probably want to have a look at the others anyway as they're not secured or under judgment you might be able to use any issues with the debts when you come to negotiation - but I wouldn't poke them until you've sorted the restriction.

[exa3z]

Yes but you don't care about the others for the moment.... if you get a good settlement on the CO one you can look at trying to settle the others - you are literally just using the others at the moment to back up / justify the offer.

You'll probably want to have a look at the others anyway as they're not secured or under judgment you might be able to use any issues with the debts when you come to negotiation - but I wouldn't poke them until you've sorted the restriction.

Okay understood. I will proceed with this advice then and your suggested letter and see what happens. The figures I've quoted are not bang on, but I presume what you have done is split the money I have available evenly over all 3 creditors? So by my calculations it works out like below.

CO	£18,042.46	64%	£6396.04
MBNA	£2,575.00	9%	£912.84
Car Thing	£7,591.35	27%	£2691.13
	£28,208.81	100%	£10,000

I will get the letter written up and sent off and I will keep this thread up to date as to what happens.

Many many thanks for your assistance with this Amethyst

Regards,

[Amethyst]

Yes Good luck - nothing is guaranteed of course but first step, see what the response is and go from there xx

[exa3z]

Yes Good luck - nothing is guaranteed of course but first step, see what the response is and go from there xx

Amethyst Okay, I have had a reply from the creditors solicitors. They have rejected my offer. They are offering to agree an affordable repayment plan and state that before they can consider my offer of £50 per month (which I am already paying and have been paying for the last 8 years plus, and which was also set by the court) they want a full breakdown of my income and expenditure.

They have been asking for a breakdown of my income and expenditure for some time now, every 6 months or so when they conduct a "review", which I have never given to them, partly because the court ordered I pay £50 a month and they should already have it because that's why the court ordered I pay that much.

Any advice of where to go from here on would be very much appreciated.

Many thanks!

[Amethyst]

You COULD go back to them and say exactly that - I have not made you an offer of £50 a month, I am already paying £50 a month as ordered by the court in xxxx, which I have paid religiously monthly for the past X years. My letter made you an offer in full and final settlement of the debt due to a lump sum having become available which I intend to use to try and settle my debts on a pro-rata basis. Should you chose not to accept then my payments of £50 per month will continue for the foreseeable future. ( You could add something about them telling you what might be acceptable as a full and final settlement so you can look at your options etc )

Be aware though that they can apply to court to increase the monthly payment if they decide to be narky. Obviously I don't know what your income /expenditure would show now, but if it would show pretty much the same £50 available ( or even less ), then could be worth doing the IE sheet so they can see you aren't fibbing and they will actually have to wait the next 100 years till the debt is paid off.

[exa3z]

You COULD go back to them and say exactly that - I have not made you an offer of £50 a month, I am already paying £50 a month as ordered by the court in xxxx, which I have paid religiously monthly for the past X years. My letter made you an offer in full and final settlement of the debt due to a lump sum having become available which I intend to use to try and settle my debts on a pro-rata basis. Should you chose not to accept then my payments of £50 per month will continue for the foreseeable future. ( You could add something about them telling you what might be acceptable as a full and final settlement so you can look at your options etc )

Be aware though that they can apply to court to increase the monthly payment if they decide to be narky. Obviously I don't know what your income /expenditure would show now, but if it would show pretty much the same £50 available ( or even less ), then could be worth doing the IE sheet so they can see you aren't fibbing and they will actually have to wait the next 100 years till the debt is paid off.

Amethyst Okay, time for some honesty. I COULD just pay the £18,000 I owe them and be done with it, because I'm getting really sick of this just hovering above my head now, but in all honesty I probably COULD come up with the cash to just get rid of it. Although this would be difficult. This however may be the easiest move. Although that is a little odd now that I've offered them just over £6000!!

I have also decided now, instead of buying the other half of the property from my ex, I am just going to sell the property and move. I work 53 miles away and it's just not feasible for me to stay here any more, I am looking for something closer to work where I can start over.

I have had my property valued today and as it stands (and as I thought) there is very little equity in the property. Valued at £125,000. Mortgage outstanding is £109,000, so there is equity of £16,000. Split this as is shared ownership with my ex, my equity would be £8000, still not enough to pay off the creditor.

I am thinking now of just putting the property on the market, and letting the conveyancing deal with the restriction, they can then use the £8000 equity on my half and I will pay the remainder £10,000 to clear it. I will just have to take a slightly larger mortgage out than I would have liked on the new property as my deposit would be less due to the fact that I have used some of it to pay off this debt.

Any advice on this approach would be helpful.

Many thanks,

[Amethyst]

As it's a restriction all the requirement is is that the creator/charge holder is informed so they can claim the debt from your share of the equity. However buyers don't like a charge being on the property and buyers conveyancers tend to hold things up until the restriction is cleared. Daft as the idea is it is paid out of the equity and any remaining debt you'd come to an arrangement to pay with the creditor, but conveyancers do prefer charges to be removed before completing a sale. If you decide to just let it be talk and go to a conveyancer first.

You can go back with a higher offer of course before selling and you should at least ask them for a settlement statement so you know your liability when/if you come to sell the house.

[exa3z]

As it's a restriction all the requirement is is that the creator/charge holder is informed so they can claim the debt from your share of the equity. However buyers don't like a charge being on the property and buyers conveyancers tend to hold things up until the restriction is cleared. Daft as the idea is it is paid out of the equity and any remaining debt you'd come to an arrangement to pay with the creditor, but conveyancers do prefer charges to be removed before completing a sale. If you decide to just let it be talk and go to a conveyancer first.

You can go back with a higher offer before selling and you should at least ask them for a settlement statement so you know your liability when/if you come to sell the house.

Amethyst I have already decided that the house is being sold, I have already told the estate agents to go ahead with the sale.

I am totally aware of what is required by the restriction, like I've mentioned elsewhere in this thread, I appointed a solicitor about 3 years ago to do a transfer of equity, when I decided to buy my ex out. I did not tell them about the restriction as I wanted to see what happened. Likewise, they said that the restriction needed to be removed in order to continue. At the time I did not have the funds available to do so, so it fell through.

I am hoping this time around that during conveyancing the same thing will happen again, and I will just inform the solicitor that I have the funds to pay the debt and have the restriction removed. I guess you are advising me to give the conveyancer the heads up on this first?

With regards to a settlement figure, I already know my liability.

Is it worth me writing back to the creditors solicitors advising that the house is being put up for sale imminently, advising of the target sale price (£125,000) and the outstanding mortgage (£109,000), and advising of the remaining equity that will be available on my half of the property (£8000), also advising that they will be entitled to this equity, but that it will not cover the outstanding amount (which is £18,000) and asking for a settlement figure?

Also is it worth me stating to them explicitly that I am not interested in their monthly payment plan and that I want to an agreement on a full and final settlement figure?

Many thanks.