Charging order

A charging order is an order from the court that allows the creditor to place a charge on your property.

This means the debt is secured against your property. The creditor will also require you to pay a monthly payment towards the debt.

If you sell your house and you still owe money on that debt, the balance is paid off using the proceeds of the sale.

A creditor can apply for a charging order if:

You have a county court judgment for their debt and have missed payments
The application for a judgment asks you to pay immediately or ‘forthwith’ and you have not asked the court to change this

If the creditor applies for a charging order you will first receive a letter telling you that the creditor has an interim charging order. This means that you cannot sell your house until the process is finished. You will also be given a date for a final charging order hearing in your local county court.

You must attend the hearing as this is your opportunity to tell the court why you haven’t paid and to give them details of your financial difficulties.

Although a charging order is normally applied to your home, it can in rare cases be attached to shares or other property.

If a creditor is threatening to apply for a charging order, you should contact us as soon as possible for advice on how to deal with it.

FAQs

Will I lose my home if I get a charging order?

England and Wales > Creditor action

If a creditor has a charging order they can apply to the courts for an order of sale. An order of sale gives the creditor the right to sell you house. However, this is extremely rare and is only ever used as a last resort. A lot of charging orders are granted in the courts but only a tiny portion result in an order for sale. If you can make at least some payment and you are not ignoring your creditors, it is very unlikely this will happen.

If a creditor does apply for an order for sale, contact us for advice as this is a complex legal area and we recommend you not to deal with it on your own

How does a charging order affect my partner?

England and Wales > Creditor action > Court action

If your house is owned in joint names and the debt is in your name only, the charging order is applied to your share of the property.

If you have a joint mortgage, all parties who have an interest in the property are informed of an interim charging order application, including your mortgage and secured loan companies and your partner.

Will interest be added after a charging order?

England and Wales > Creditor action > Charges and interest

Some creditors may claim that a charging order means they can begin adding interest again. This is not correct.

If a debt is regulated by the Consumer Credit Act, no further interest should be added after a county court judgment. A charging order does not change this.

Statutory interest of 8% per annum may be added to debts over £5,000 which are not regulated by the Consumer Credit Act.

If a creditor appears to be adding interest after a county court judgment, please call us for advice.