Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
May I ask what stage your divorce has reached. You refer to a judgement - have you obtained a consent order for financial provision?
I presume this is the reply field?
Hello - I can see your post so it looks like you are ok
My son lent a large sum of money to his cousin for three months, which after several months has not been returned. The cousin has now had a divorce and they have apportioned the assets of fifty fifty house ownership, and the wife to get fifty percent of the value of their business. I guess the business can be liened prior to my son taking out bankruptcy proceedings if the loan return is still not forthcoming?
thank you. Based upon what you say, your son will have a financial claim against his cousins (not the cousins wife's) assets, and this claim is not avoided or impacted by any divorce settlement. Your son's cousin's wife cannot take from his cousin what he does not own and accordingly any settlement she receives under divorce will be subject to any debts he owes. Of this much I'm sure you are already aware. in terms of how your son may protect his position…
has your son yet issued any form of proceedings against his cousin in court for recovery of the debt? Is the amount he is owed more than £750 - I assume so from what you say?
Yes he is using a fairly local lawyer, but finds him not to be helpful in providing alternative routes rather than just going to court.
My son lives in Florida and has little time to pay attention to this.
Thank you. Before your son can get to the point of securing the debt against his cousins property, he needs to obtain some form of judgement against his cousin. To proceed otherwise, he can register what is known as a "Notice" against his cousins property at the land registry though the value of a notice is somewhat limited unless it is agreed by his cousin. Notice simply is notification that your son claims a debt against his cousin and would bring the matter to the attention of any buyer or court however, if his cousin disputes your sons claim, his cousin can apply to remove the notice from the land registry at which point the land registrar would request evidence from your son in order to determine whether to keep the notice or whether to remove it.
I might add there is a contract so there is not a dispute about repayment.
If your son's cousin is willing to cooperate, he can agree a notice which is apprpriately known as an "Agreed Notice". this has more value in that it cannot be removed as simply as the above.
however, neither of the above techniques are as solid as obtaining judgement. Your son has two principal approaches he could consider. if the amount involved is more than £750, your son could issue a statutory demand which is a formal notice that if payment is not received for the debt within 21 days of date of service of the notice, your son may apply for a bankruptcy order which has the effect of transferring all of your sons cousins assets to a trustee in bankruptcy who will then repay all of his debts from those assets. Bankruptcy must be considered carefully because your sons debt will be treated no better than anybody else's debts and if there is a shortfall overall, your son may not recover full payment. In addition, apply the bankruptcy will cost more than several hundred pounds. However, serving statutory demands does not mean your son has to apply the bankruptcy afterwards and so statutory demands can be a cost-effective and useful alternative to going to court because they can persuade reluctant debtors to pay up what these negotiate on fear of being made bankrupt if they do not
the alternative is the conventional approach of issuing proceedings in the County Court, seeking judgement and enforcing judgement either by security or using other enforcement means. If your son has conclusive evidence that the debt is owed there is no reasonable defence available to his cousin, he may be able to seek summary judgement in the matter bypassing the need for a hearing. If not, the matter will proceed to a hearing and overall is likely to take at least 2 to 3 months before judgement is obtained
If your son is successful in obtaining judgement, he has a variety of enforcement options available to him such as seeking a charging order against property, deduction from earnings, bailiffs recovering property and so on as well as of course bankruptcy. Enforcement can be taken against any of his cousins assets and that one or more of those assets may have been transferred to his wife will not prevent your son claiming against them for a period of five years
Is there anything above I can clarify for you?
Thanks, ***** ***** notice or an agreed notice will not make him return the loan any sooner I feel. Finishing reading your reply one last question, if a lien is put against his cousins business property and then he enforces his bankruptcy proceedings would he get priority payment after say the bank and government ?
you are quite right that a notice, whether agreed all unilateral will not in itself encourage payment. I simply mention them to give the full range of options available. With regards ***** ***** query, unless your son took security for the loan which I assume he did not, then he will be treated as an unsecured creditor and the debt owed to him will rank 2nd to any secured creditors such as mortgage lenders and the like. If your son is an unsecured creditor, in the event of bankruptcy, your son's debt will be pooled equally weighted with any other unsecured creditors debts the cousin owes. Your son is dead is not given preferential treatment over other unsecured debts simply because he brought the bankruptcy action himself for example
in order to attain preferential treatment to unsecured creditors, your son would need to seek security for the loan whereby his cousin allows him to take a charge on his property. the cousin could refuse of course. This is only relevant though if the cousin has more debts than assets because if there are more assets available and debts then all creditors will be paid fully in the event of bankruptcy
Does the above answer all your questions or is there anything I can clarify or help you with any further?
Is a lien classed as a charge on the property (sorry I'm so dumb)
Not at all - there are so many terms to contend with...
A lien is not the same as a charge nor is it quite the right the term here because a lien is a legal right to hold on to assets in his possession pending payment of a debt owed. The exist in certain circumstances but do not apply here because unfortunately if for no other reason, I assume your son does not hold any of his cousins property over which to exercise a lien.
in order to secure the loan, without recourse to the courts as discussed above, his cousin would need to give him a charge over one of his properties. This is essentially the same thing as a mortgage. It would likely rank second to any existing charges/mortgages on the property. Of course it also requires the cousins consent if no right exists to take charge in the contract between your son and the cousin
is there anything else I can help you with?
Thank you again, but one last question to clear up what I think and what is correct. My son can attach a lien to his cousins house so that when it is sold he can claim what is owed from the proceeds. However this does not apply to the business, my understanding is that a lien would protect his claim for the return of the money if the house sale does not go ahead, he can then lein the business to protect his loan. Or would that be overkill?
He can do as you suggest. In your example the lien would in fact be either a charge (if granted willingly by the cousin) or if not it would be a charging order (granted by a court). charge for charging order as the case may be would do exactly as you understand with the one caveat being that if there is a prime mortgage, the charge of charging order is vulnerable to the mortgage lender repossessing the property in exercising its power of sale there even if this were to happen, your son should still be able to recover monies from any balance left over from any sale following repossession.
Your son could seek a charge or a charging order he has to go to court over the cousins house or business premises that the cousin owns.
Has the above answered your questions satisfactorily?
Thanks I can let you go now Joshua, you have been a great help!! Don't like the website though
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