Charging Orders - Free Help and Advice
A Charging Order is one of serveral options a Creditor has to enforce a CCJ. It works by securing an unsecured debt against a debtor's property or other assets, this is called placing a charge on the property/asset.
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From the creditor's point of view, a charging order will not normally get them their money immediately. What it means is that if the property/asset is sold, the charge has to be paid to the creditor before any of the proceeds of the sale are passed on to the debtor.
A charging order in itself does not force a debtor to sell a property.
If the debtor has other assets of value, the court can put a charge on these instead.
If there are already loans secured on the property before the charging order is registered, for example a mortgage, then the original loan/mortgage will be repaid first.
Interim and Final Charging orders
Application for Charging Orders are initially dealt without a hearing, by a district judge. If happy with the application, the district judge will then:-
- Make an Interim Charging Order which with immediate effect places a charge over the debtor's assets to which the application relates. This is so the asset can't be disposed of before the charging order is fully in place.
- Set a date for a hearing to consider whether to make a Final Charging Order.
When can someone apply for a Charging Order against me?
After an high court or county court judgment when:-
- You failed to pay the full amount of the judgment when it was due; or
- You has failed to pay one or more of the installments due under the terms of the judgment.
How can I contest a charging order made against me?
The court must consider whether it is reasonable to make a charging order. Under the Charging Orders Act 1979 the court has to consider all the circumstances of the case.
Some factors that the court may consider:
- Has any member of your family a disability or serious illness?
- If you have multiply debts, making a charging order in favour of one creditor would give them unfair priority over other unsecured creditors. It is particularly useful if you can show you already have a payment arrangement in place with your other creditors that would be upset by an order being made. Your creditor has a duty to list all the other creditors that they are aware of in the application for an interim charging order.
- The court can order the interim order to be sent to the other known creditors but does not have to do this. This means that creditors who may want to object to the final charging order being made will not know about the hearing. You can raise this in your written objections and at the hearing if you think a creditor may be unduly prejudiced by the charging order.
- Could the creditor have given you a secured loan when you first took out the loan? If they decided to offer an unsecured loan instead, this could be particularly relevant if you have other unsecured creditors who may be disadvantaged by a charging order being made.
- There are other ways the court could enforce payment of the debt. You could ask the court to make an installment order so you make monthly payments you can afford, or an attachment of earnings order so that the installments would come directly from your wages. This is only useful if you are employed and your employment would not be at risk.
- If your debt is covered by the Consumer Credit Act, which is more than likely, you can apply for a Time Order. A Time Order can change the monthly payments and extend the term of the loan.
- For debts under £5,000 in total to all creditors, you can argue that the debt should be included in an administration order rather than a charging order.
- If bankruptcy is looming, you can argue that a charging order would give the creditor an unfair advantage over other unsecured creditors.
- If your have negative equity in your property, then you can argue it is not worth a charging order being made, as the creditor would not be paid off, even if they forced your home to be sold.
- You should point out any particular hardship which your family would suffer if a charging order was to lead to the sale of the home. This is particularly important if the debt is in your name but you own your home jointly so it is not even your partner's debt.
What To Do Next
If you are worried about being subject to a Charging Order, then please call us for FREE advice or submit the form on the right of this page.
We can help make an offer that will be affordable to you and acceptable to your creditors. The sooner you ask, the more chance we have of being able to help you.
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This material is for general information and only constitutes advice in the broadest of terms. You should not rely on this information to make any decisions. Call our advisors on 0800 043 2444 for professional advice for your own particular situation.