If a creditor is seeking to place a Charging Order against the debtor’s property, the Court can impose conditions to the order allowing the debtor to make payments by instalments to prevent the creditor forcing the sale of the property.
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What Is A Charging Order?
This is an order given by the Court that attaches a debt owed under a judgment to property owned by the debtor. Usually the charging order is made against a house but it can be other property such as a car.
If a creditor is seeking to place an Order against the debtor’s property, the Court can impose conditions to the order allowing the debtor to make payments by instalments to prevent the creditor forcing the sale of the property.
Can I Lose My House?
If a Final Charging Order is issued, it does not mean that the debtor will have to sell their house. The order is an application to secure the money owed to your property.
Once the Final Charging Order has been issued, the debtor will arrange to pay the debt by monthly instalments. If the debtor refuses to pay or the debt is sufficiently large to justify the property being sold, the creditor can make Part 8 Proceedings to the Court to force the property to be sold.
Part 8 Proceedings are fairly rare and in our experience, the debt has to be in excess of £10,000 and the debtor refusing to pay.
How Are Charging Orders Issued?
The process is as follows:
1. An individual who is owed money under a judgment, known as a creditor, makes an application to the Court for a charging order to be issued. This is applied for using a Court Form alongside Land Registry documents demonstrating that the debtor owns property. At this stage, the Judge will assess the Land Registry documents and can make an Interim Charging Order.
2. If a Charging Order has been issued, it must be served on the debtor and other creditors no less than 21 days before the final hearing. The creditor has to notify everyone who has an interest in the property. Usually at this point, the interim order is registered against the property.
3. After this has been completed, the Court will list the claim for a hearing so the Judge can decide whether to issue a Final Charging Order. If the debtor wishes to object to the interim order, written evidence must be served on the Court no less than 7 days before the hearing. The Court will consider the personal circumstances of the debtor.
4. If the creditor is successful this means that the order is final and will remain registered on the property as a charge against the house. Anyone who has an interest in the property is permitted to attend the hearing.