What is a charging order on a property

If you have been given a CCJ due to an outstanding debt, the person or business you owe may ask the court for a Charging Order to secure this debt against your home or any other property you own.

Simply put, your creditors are saying, “You may not have the money to pay now, but you have a property that is worth something. We will use it to guarantee we are eventually paid.”

Now, it's important to understand that charging orders are not a common occurrence. They are often a last resort when it comes to debt recovery. The likelihood of this happening depends on the size of the debt, your other options to pay it off and how aggressively your creditors are pursuing the debt.

If your debt gets to the point of a charging order being issued, you must know what happens next and where you go from here. By knowing this, you can make a sensible, informed decision and take back some control of the situation.

It's time to understand more about scenarios impacting Charging Orders …

Firstly, not all debts will be granted a Charging Order to secure them. It depends on when your County Court Judgement (CCJ) was granted and if you have maintained your payments since the CCJ was issued.

The law regarding Charging Orders changed in October 2012, meaning that whether you were issued a CCJ before or after that date can greatly affect your situation.

What you need to check are the three following things:

1. The date your creditor applied for the CCJ
2. The date it was granted and
3. What it says about repayments

The court is unlikely to grant a charging order request unless you’ve missed a deadline to pay your debt. Or, you have missed an instalment on an agreed repayment plan.

So, if it’s an old debt and you’ve been keeping up with the repayments, there’s a good chance you’ll be okay.

Your creditors can apply for a Charging Order once they have secured a CCJ, no matter how well your repayments have been going.

Don’t worry; you still have options if that’s the case. Below, we’ll explain exactly what they are.

The Charging Order application has two key stages after the initial application:

Stage one: Your creditor gets an ‘Interim Order’ from the court.

Stage two: A decision is made on whether a ‘Final Charging Order’ is issued.

Put simply, a mark is placed against the property with the Land Registry, which prevents you from selling it before the Final Charging Order is decided on. To be more precise, it stops you from selling it without telling your creditor.

A creditor can obtain this Interim Order without a hearing once they have been granted the CCJ unless you had made all your agreed instalments on time, in which case the matter will be brought before a judge to decide (regardless of when the CCJ was issued).

Your creditor must send you a copy of the Interim Order within 21 days of it being made. Now it’s time for your move. You then have 28 days to object to the ‘Final Charging Order’ going ahead or at least seven days before the hearing date if one was agreed when the judge granted the Interim Order.

First thing first, don’t ignore it. If you’ve received your copy of the Interim Order in the post and object to it, you need to send your objection in writing to the court and a copy to the creditor.

You should receive notification in response to your objection in the post, informing you of a hearing date at your local county court. Based on the information provided by both parties, the judge will decide whether or not to grant the Final Charging Order.

When you are in front of the judge, explain any extenuating circumstances and let them know if you feel you can pay the debt off quickly. Some honesty and a realistic plan of action often go a long way. You can’t change what’s happened before, but you can influence what happens in the future, so give yourself the best chance!

If a judge grants a ‘Final Charging Order’, you cannot sell your property without clearing all monies owed to the creditor. The sale will not go through without this happening.

The only immediate action you can take to prevent the Final Charging Order from being issued is to settle the debt. It sounds straightforward, but the reality is that you probably wouldn’t be reading this if you were able to do that.

Another option is to ask the judge if the Final Charging Order can be suspended with a commitment to an agreed payment plan. Conditions like this may be granted, but know that if you break the agreement, the Final Charging Order will likely be granted.

If the judge has decided to grant the Charging Order. To prevent any further action, you can ask the judge for a condition that prevents the creditor from trying to force you to sell your house immediately (Order for Sale).

For example, you could ask the judge to insert a clause preventing the sale of your house while your children are still living there.

When presenting your case, remember that you have the right to make a reasonable and fair request. The judge must decide whether your request is indeed reasonable and fair to both parties.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.