What Is a Charging Order?

If you’re subject to a County Court Judgement (CCJ), your creditor can apply to have a charging order made against you.

A charging order is a type of court order which secures the debt you owe against your property – creditors may then be able to force you into selling your home so they can collect what they’re owed.

In this guide, we’ll be looking at when a charging order can be made against you, what are the potential consequences, and how you can protect yourself.

When Can a Charging Order Be Made?

Since the 1st of October 2012, creditors have had the ability to take out charging orders on anyone they have a CCJ against – even if you’re up to date with their payments.

Before this, creditors could only take out charging orders on debtors who had failed to meet court-ordered payments. If you’re dealing with an old CCJ and you’ve been keeping up with your payments, it’s worth double-checking the date the CCJ was issued.

What Is the Process of a Charging Order?

There are a couple of stages to the charging order process; you’re first served with an interim charing order, which eventually progresses to a final charging order.

Interim Charging Order

The process begins with your creditor applying to court with an N379 form. This form details the debt you owe and is supplemented with evidence from the Land Registry that you are the owner of your property.

If the court recognises that you own a share of the property, you’ll be served with form N86, which is a letter notifying you of the interim charging order. You’ll also be given a copy of your creditor’s original application.

Copies will also be sent to your spouse, civil partner, or anyone else you share the property with. This could include other joint owners, mortgage providers, or your other secured lenders.

An interim charging order can be put into place without a court hearing.

Once in effect, the interim charging order places a restriction on your property’s Land Registry listing – this prevents you from selling the property until the interim order is removed or a final charging order is put into place.

Final Charging Order

When you’re served with an interim charging order, you’re given 28 days to object. If you don’t do anything, you’ll be served with a final charging order.

If you do object, you’ll be given a hearing with a District Judge. They’ll listen to both sides before deciding if the order should be finalised, and what terms should be included.

Once a final charging order is in place, the creditor’s debt is officially secured against your property.

How Can I Object to a Charging Order?

When you’ve been charged with an interim charging order, you’re given 28 days to object. You’ll need to write to your creditor and the court.

The court will then arrange a hearing for your case. You may object because:

The property isn’t yours
You don’t have any equity in the property
The CCJ happened before October 2012 and you’ve not missed your payments

What Are the Potential Consequences of a Charging Order?

Charging orders are particularly worrying as they open up the potential for your house to be sold. The creditor can apply to the court for an ‘order for sale’, which forces you to sell your house so they may get their money back.

Creditors can only apply for an order for sale if your debt is over £1000.

If they do apply for an order for sale, you’ll be granted one final hearing where you can explain your circumstances to a judge; keep in mind that they’ll only grant the order as a last resort.

How Can I Protect Myself?

Instalment Order

If you’ve received an interim or final charging order, it’s worth considering an instalment order. This allows you to repay your debt in affordable monthly chunks and – most importantly – protects you from any orders for sale so long as you keep up with your repayments.

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement allows you to make one monthly payment over a 5-year period which is then divided up between all of your creditors. So long as you keep up with your monthly repayments, creditors cannot pursue legal collection action against you.

Unfortunately, you cannot include a charging order in an IVA as it a secured debt – however, an IVA can help to keep your other unsecured debts more manageable. This can help you keep on top of your charging order payments.

You can include CCJ debts into an IVA, however. If you’re successful in doing this, your creditor will be prevented from ever making a charging order in the first place.

Speak to an Expert Today

If you’re struggling with your personal finances, you should get in touch with an insolvency practitioner as soon as possible.

Early action prevents debt problems from spiralling out of control. Our team can help you decide the best course of action for you, whether it be an Individual Voluntary Arrangement or a more informal option like a Debt Management Plan.

FAQs

Does a Charging Order Show on Your Credit Score?

A charging order doesn’t show up on your credit score, but your CCJ will. The CCJ will remain on your credit file for 6 years, although you can get this amended if you pay the debt.

Do Charging Orders Expire?

No – a charging order will remain in effect until you pay the debt off in full.

How Do Charging Orders Affect Joint Tenants?

If you have a charging order made against you – and the debt is only in your name – the charging order can only be made against your share of the property.

However, if the debt is in both of your names, the charging order can be made against your property as a whole.