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What is a Charging Order?

19 February 2019 - Posted by TalkAboutDebt

A charging order is one of several options that a creditor may look at as a method of ensuring that the debt is repaid if it is not possible then they will look at other methods of enforcing repayment. This is often the last resort for creditors and the debt has to have gone to court for judgment before they can pursue a Charging Order.


What is the process of getting a charging order?


A County Court Judgement (CCJ) is the first step for a creditor wishing to obtain a Charging Order. Where a creditor has a CCJ and the client defaults on a payment the creditor is within their rights to take the client back to court to get the debt secured against their property in the form of a Charging Order. Once a debt is secured against a property the creditor has the right to potentially force the sale of the property in order to release any equity contained with it to clear the debt, however, this is very rare.


What happens after a charging order is placed?


The charge on the property means that when the property is sold, if there is enough money in the house, then the debt will be repaid. Whether the creditor will accept a lower amount in full settlement of the debt could only be their decision. It may be worth contacting them to negotiate your terms.

If Charging Orders were placed on the properties before you went bankrupt, and those properties were not surrendered in the bankruptcy then the Charging Orders will remain on the properties post-bankruptcy and will not be discharged.


How long does a charging order last?


The order will remain in place until you pay it off by either selling the house or using other means by which to pay it. However, as long as you have enough equity in your property then having this charge should not affect your ability to remortgage. Your conveyance may need to get permission from the Official Receiver.


Can my ex put a charge on my property?


If your ex decides to apply for a charge on your property then there will likely be some fees, whether it is simply filling a form with Land Registry or filing a form with the court. They may decide to use a solicitor for advice so may also incur their costs, if you disagreed and contested it then no doubt there would be further costs involved. However, it is not really possible to say here what it will cost them if they choose to seek a charge.

Please note, a court would not allow a charge to be placed on a property owned by somebody else for a debt that you owe.


How does a charging order affect Joint tenants?


A joint tenancy is severed by the making of a charging order against one of the owners. This means that the joint owners become tenants in common so that the debt can be secured against one party’s share of the property. If this has happened then the other party’s share of the property will form part of their estate and will need to be dealt with accordingly by the personal representative. Please be aware that creditors need to be paid before any of the estate is distributed to beneficiaries.


How do I find out if there is a charge against a property?


You may need to ask this question in a forum dealing with property sales and purchases, a mortgage adviser, solicitor or conveyancer. You can find out information about whether a mortgage or charges are registered against a property (but not the amount) by searching the Land Registry.


What happens to charging orders by previous owners?


Before you bought the house it may have had mortgages, charges, secured loans linked to it in relation to the previous owners. If the previous owners were being chased for debts and a creditor tried to place a charge on their property it would be on the property they own now, not on a property that they used to own but now belongs to someone else. You could check the details with the solicitor who helped you purchase the property.


How to remove a charging order from a property?


Removing a charge is not easy and there are only two real ways of doing so. First, the creditor who applied for the charge would have had to obtain a CCJ against you. It would have been at this point your lender would have proved you owed the debt.

If you weren’t represented at this hearing and you can show you never received proper notification of the application for the CCJ, you may be able to get the CCJ set aside.

Alternatively, you can request the charge be removed. Although this is difficult to do unless you can show the process was flawed. You should seek specialist advice in relation to this.

The other option is to seek a repayment plan with your creditor. If you do this you could ask that no order for sale of your home be made, and if one has already been made, ask that order be set aside, on the basis you will stick to the repayment plan.


Land Registry Charge Removal – How do I remove a land charge on the property?


If the charge was originally an unsecured debt, and it is now secured, then it will be repaid when the property is sold If there is enough money from the sale to allow this to happen, if not then some debt may still be left to pay. If you pay off the debt then there will be nothing left to pay when the property is sold.

You could also ask the land registry about the removal of charges. You can contact the Land Registry via their enquiry form.

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