Court Action – Charging Orders
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Following on from my other blogs, another option for your creditors after a CCJ is to apply a Charging Order against your property.
What is a Charging Order?
A Charging Order is where an unsecured creditor secures the amount owing to them on your property. This is done through the courts, just like with a CCJ.
Who is at risk?
Anyone who owns a property with unsecured debts who has previously defaulted on payments and had at least a CCJ issued against them. The property doesn’t have to be in your sole name, creditors can make a sole debt secured against a jointly owned property.
What happens with a Charging Order application?
After you break the terms of the CCJ your creditor will apply to the courts to turn the unsecured debt into a secured debt against the debtor’s property. Once the application has been made you will receive notification of this as well as a hearing date.
It is always in your best interest to attend the hearing so that you can plead your case to the judge. When you attend the hearing you will need to take with you the following: income and expenditure breakdown, list of all creditors and anything else that you feel will help your case. If the Charging Order is granted then you will be required to maintain monthly payments to the creditor or risk losing your house.
What if I am in negative equity?
It is very unlikely that a creditor would want to apply a charge to your property if there is not equity as there would be no gain for them. However if your property is in negative equity then they could still proceed to try and apply a charge. If you have proof that there is no equity in your property then you would provide this at your Charging Order hearing.
What happens if I don’t maintain payments?
If you do not maintain your payments towards your secured loan then your property is at risk of being repossessed.
How does this affect my partner?
If you jointly own the property with your partner or someone else, as mentioned earlier the creditor can still apply a charge to the property. If you fail to maintain the payments then your creditor can repossess the property. Once the property has been sold and the outstanding mortgage has been paid then the equity is split 50/50. Your 50% would go towards paying the secured loan and your partner would keep their 50%.
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