Charging Order
What is a Charging Order?
A charging order is an order from the court placed on a debtor?s property (house or land) for monies owed to a lender (creditors).
If you have borrowed money (which is not secured) and you have not kept up with the repayment arrangement, then the lender (creditors) can request the court to place a charging order on your property. This means that if you sell the property you will have to pay that debt off first before any of the proceeds are given to you.
In basic terms the unsecured debt becomes a secured debt on your property.
When can a lender apply for a charging order?
Before a court will consider an application for a charging order, the lender (creditors) must have issued a county court judgement and you (the debtor) must have failed to make payments on that judgement.
What happens when a debtor receives a charging order?
The lender (creditors) will apply to the court for the charging order. Once the court has considered the application and is satisfied, they will issue you a letter stating the time and date of the hearing.
At the hearing the judge will decide if to make a final charging order. If the judgement is put in place you and the creditors will receive a Final Charging Order form. The lender (creditors) will then need to inform the Land Registry of the order.
Will a customer be forced to sell their house or land?
You are not under any obligation to sell your property once the final charging order is in place; however, there are extreme circumstances where a lender (creditors) can apply for a force of sale. This is rare and the court would have to agree to the application before such an order would be served.
Creditor
Someone you owe money to.
Unsecured lending
Total loan & credit card debts excluding your mortgage and any hire purchase.
Country
The country you currently live in.
Insolvency Practitioners
Also known as an IP, a person who specialises in formal insolvency cases.
Valuations
The process of determing the current value of an asset.
Equity
The difference between the market value of a property and the claims held against it.
Lender
Someone you owe money to.
Eviction Order
A court order by which a person may be evicted.
Arrears
An unpaid and overdue debt.
Disposable Income
The amount of income left to an individual after taxes have been paid, available for spending and saving.
Statement of Affairs
A financial report showing assets and liabilities at expected liquidation values and shareholders' equity.
Insolvent
Unable to meet debt obligations.
Secured Loan
Money borrowed using goods or property as a guarantee.