Charging orders

A charging order is an order from the court placed on a debtor’s property (house or land) for monies owed to a lender. 

What is a charging order?

If you have borrowed money and the money is not secured and you have not kept to the repayment arrangement, a lender can request the court to place a charging order on your property so that when the property is sold 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 secured on your property.

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When can a lender apply for a charging order?

A creditor may apply for an interim charging order at any time after obtaining a County Court Judgment (CCJ) for your debt, if the CCJ was issued after 1st October 2012. Please note that since 5th April 2013, a creditor may make this charging order application if the sum owed is £1,000 or more (previously this minimum sum was much higher). If a CCJ was issued before 1st October 2012, a creditor must wait until a debtor defaults on a CCJ before they are allowed to apply for a charging order.

What happens when I receive a charging order?

The lender will apply to the court for a charging order, once the court has considered the application and is satisfied with the application, you will receive the order on a N86 form. The form will include information regarding the time and date of the hearing when the judge will decide if to make a final charging order.

If the judgment is put in place, you will receive a N87 form (Final Charging Order), this form will also be sent to the lender. The lender will then need to inform the Land Registry of the order.

Will I be forced to sell my house or land?

You are not under any obligation to sell your property once the final charging order is in place, however, there are some extreme circumstances where a lender can apply to a court for force of sale. This is, however, rare and the court would have to agree to the application before such an order would be served.

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