- make regular payments to your creditor
- pay off the whole debt by a certain date
When your creditor has a court order against you, they can apply for another court order that secures the debt against your home or other property you own. This is called a ‘charging order’. If you own your property jointly with someone else but the debt is only in your name, the creditor can only get a charging order for your share of the property – this is known as your ‘interest’.
A charging order is very serious – you could lose your home if you don’t pay back what you owe. After your creditor gets a charging order, they can usually apply to the court for another order to force you to sell your home. This is called an ‘order for sale’.
If your creditor tries to get a charging order or an order for sale, you should take urgent legal advice.
When a creditor can apply for a charging order
Your creditor can only apply for a charging order if they’ve already got a county court judgment (CCJ) against you. After they get the CCJ, your creditor must apply to the court again to get a charging order.
If the creditor applies for a charging order and you haven’t missed a payment deadline, you should go to the court hearing. You can give evidence to the judge to show you’ve kept to the terms of the CCJ.
If you’ve missed some payments, try to catch up with them before the hearing. If you do this, you won’t get a charging order.
How a creditor gets a charging order
The application for a charging order always has two stages. First your creditor has to get an ‘interim order’ and then a ‘final order’.
The court usually grants an interim order to stop you selling your property without your creditor knowing before the final order can be made.
If a court grants your creditor a final charging order, this means that if you sell your property, you must pay your creditor back out of the proceeds.
If your creditor gets a final charging order, this doesn’t mean you’ll have to sell your property. If your creditor wants to force you to sell your property, they’ll have to apply to the court for a further order called an ‘order for sale’.
You can argue against your creditor being given a final charging order or an order for sale. You can also ask the judge to attach conditions to the final charging order- this makes it harder for the creditor to force a sale.
Interim charging orders
An interim charging order is usually made by a court officer without a hearing. There’ll only be a hearing with a judge if either:
- you’re up to date with an installment order that was made before 1 October 2012
- the court officer thinks there’s a reason the application should be considered by a judge
If the decision is made by a court officer, your creditor has to send you a copy of the interim order within 21 days of the order being made.
If the decision is made by a judge, they can either:
- refuse to make an interim charging order
- make an interim charging order
- make an interim charging order and set a hearing date at your local county court – at the hearing a judge will consider whether to make a final charging order
When your creditor applies for an interim charging order, they’ll also register a charge on your property at the Land Registry. This means you can’t sell your property without your creditor knowing about it.
If you can pay back the debt in full at this stage, you can get the charge removed from the Land Registry.
Final charging orders
After you’ve been served with an interim charging order, you have 28 days to object to a final charging order. You must send your objection in writing to the court and the creditor.
If you send an objection, there’ll be a hearing at your local county court, and a judge will decide whether to make the final charging order. If you don’t send any objections, the judge will decide whether the charging order can be made final without a hearing.
If a judge has already arranged a hearing after making a decision about the interim charging order, you must send your objection to the court and the creditor at least 7 days before the hearing.
You should go to the hearing. If you can’t, you should explain this to the court and ask for a different hearing date. If you don’t go to the hearing, the court is likely to make the order final.
At the hearing, the judge will:
look at the evidence you’ve sent to say why you don’t want a charging order to be made
look at the arguments made by your creditor
decide whether to make a final charging order after considering the evidence from both sides
If the court grants a final charging order, your creditor can wait until you sell your property or apply to the court for an order for sale if they want you to sell your property straight away.
You might be able to persuade the judge not to grant your creditor a final charging order.
The judge might also agree to attach conditions to the charging order – this stops or makes it harder for your creditor to force you to sell your property.
To get help to putting your arguments to the court or asking for conditions to be attached to the charging order, contact your nearest Citizens Advice.
At the hearing for a final charging order, the court must consider all the circumstances of the case before it decides if it will make the order. Your personal situation is very important.
You might be able to use one of the following arguments to persuade the judge not to make a charging order – but in most cases a final charging order will be made.
If you haven’t missed installment payments
For county court judgments made since 1 October 2012, the judge will consider whether you’re up to date with any regular payments. If you’ve missed payments, they’re more likely to make a charging order against you.
There’s very little or no equity in your property
Equity is the amount of profit you’d make on your home after you sell the property and pay off your mortgage. If there’s little or no equity in the property, your creditor wouldn’t get their money back if it was sold.
Other creditors aren’t asking for a charging order
If you have more than one creditor, the others might have agreed to let you pay back their debts by installments, instead of asking for a charging order. You might be able to argue that you shouldn’t have to grant one creditor a charging order if none of the others think it’s necessary – especially if you owe the other creditors more money.
A charging order is unfair on other people who live with you
You might be able to argue that other people who live with you would be severely affected if you had to sell your home. For example, think about the effect it might have on any children, older people or disabled people you live with.
If you own the property with someone else but the debt is only in your name, you can argue that it’s not fair on the joint owner for the property to be sold.
A charging order is unfair on your other creditors
If you have other creditors, you could ask them to object to a final charging order because it would be unfair on them. If you’re likely to be made bankrupt, you could argue that a charging order would give the creditor an unfair advantage over other ‘unsecured’ creditors. These are other people you owe money to but who don’t have a clear way to get it back. For example, unsecured creditors can’t make you sell your house to pay them back.
What can you do once a final charging order is made
If the court decides to grant a final charging order, you might be able to:
- apply for the order to be ‘set aside’
- ask for conditions to be attached to the charging order
- get the charging order changed
Applying for the charging order to be set aside
If a final charging order has been made, you might be able to apply to the court to have it set aside.
This means the debt goes back to the judgment stage and your creditor will have to reapply to the court if they want to take further action. This can give you more time to repay your debt.
You can only do this if you think the court didn’t consider your circumstances properly. You must make this application as soon as possible after the charging order is made final.
Download the N244 court application form on GOV.UK.
NOTE: It can be very difficult to get the charging order set aside.
Asking for conditions to be attached to the charging order
You might be able to ask the judge to stop your creditor from forcing you to sell your property straight away. This is called ‘attaching conditions’. For example, you can ask for either:
your property not to be sold while your children are still at school
the final order to be suspended as long as you keep to an agreed repayment plan
There might be other conditions you can ask for, depending on your personal circumstances.
You will need specialist help to put your arguments to the court and to ask for conditions to be attached to the charging order.
Getting a final charging order changed
If the charging order has conditions attached, you might be able to ask the court to change them if your financial circumstances change.
For example, the charging order may say you have to pay back your creditor in installments. You can ask the court to change the amount of the installments or the date the final installment has to be paid.
What happens if there’s an order for sale
When your creditor has been granted a final charging order, they can apply for an order for sale. This is a court order that forces you to sell your property and use the money you make from the sale to pay your charging order debt.
There will be another court hearing and it’s very important for you to go. The court will decide whether to make an order for sale or not.
A creditor can’t get an order for sale if both:
- you owe less than £1,000 – including any court costs
- your debt is covered by the Consumer Credit Act
An order for sale is very serious and legally complicated. You should seek legal advice as soon as possible if your creditor tries to get an order for sale against you.
If you were ordered to pay your debt by installments
Your creditor can’t get an order for sale if:
- the county court judgment was made on or after 1 October 2012
- you were asked to pay in installments
- you’re up to date with your payments
If you missed any payments, try to pay them before you have to go to court – this will stop your creditor getting an order for sale.
Why a creditor decides to apply for an order for sale
After they’ve got a charging order, your creditor might agree to wait for you to sell your home when you’re ready. Other creditors might apply for an order for sale straight away. They can do this even if you owe them a fairly small amount of money compared to the value of your home.
Whether or not a creditor is prepared to wait depends on how quickly they want their money back. They might also take one or more of the following things into consideration:
- if you can pay the money back another way within a reasonable time – for example, you might be able to make regular payments or raise a lump sum to clear the debt (if your creditor gave you time to pay the money back when the final charging order was made and you didn’t keep to the agreement, they’ll probably apply for an order for sale)
- if there are other mortgages or secured loans to be paid from the proceeds of the sale – if other debts need to be paid off first, your creditor might not gain anything by making you sell your home
- how much equity there is in the property – equity is the amount of profit you’d make on your home when the property is sold and the mortgage is paid off (if there’s little or no equity in the property, it may not be worth the creditor forcing you to sell it)
- if they think you haven’t paid the debt even though you can
- if they think forcing you to sell your property is the only way of getting their money back
How the court decides to grant an order for sale
If your creditor decides to apply for an ‘order for sale’, you’ll be asked to go to court. It’s very important for you to go to the court hearing so you can tell them about your situation.
When you’ve got a date for the court hearing, try to get specialist advice as soon as possible. If you can, take a legal representative with you, like a specialist adviser. You might be able to get help with your legal costs.
The legal situation can be very complicated and you might be able to make a number of legal and personal arguments why the property shouldn’t be sold.
The court can order a sale if either:
- the property and debt are in your name only
- the property has joint owners and the debt is in both your names
- the property is jointly owned but the debt is in your name only – but it might be harder for your creditor to get an order for sale
If there are joint owners of the property but the debt is only in your name, it might be more difficult for the creditors to get an order for sale. This means it’s really important for all joint owners to go to the court hearing for the order for sale, so they can explain their situation. This includes a husband or wife who isn’t a joint owner, but who lives in the property and might be entitled to a share in its value – this is called a ‘beneficial interest’.
The court can decide it’s unfair to force someone who wasn’t responsible for the debt to leave their home.
It will also look at the interests of the whole family and decide if these are more important than those of the creditor. Some of the things it will take into account include:
- if there’s enough equity in the property to pay off the mortgage and the charging order debt – if not, it might not be worth forcing you to sell your home
- the reasons you bought your home – for example, if it’s a family home or an older or disabled person lives there
- the wellbeing of any children – for example, what the effect of moving would be, or if a child is ill or disabled
- if there are other ways you can pay back the debt, for example through an installment order, administration order or an attachment of earnings order
If any of these things apply to you, you should make sure the court knows about them.
You can still make an offer of payment at this stage and ask the court not to order a sale as long as you keep up with the payments. You should provide a full financial statement of your circumstances. You can ask the court to postpone the order for sale proceedings or ‘suspend’ the order. A suspended order means the order for sale will be delayed – for example, until your children are grown up.
If the court makes an order for sale
If the order for sale is made and not suspended, you’ll normally be given 28 days to pay the debt or leave the property. If you don’t pay the debt or leave the property within 28 days, your creditor can apply for an order to force you to leave the property. This is called a ‘warrant of possession’.
How a charging order affects the people you live with
If you have joint ownership of your property with someone and the debt is in both your names, the court can make a charging order on the whole property.
If the debt is only in your name and the property is in joint names, the court can only make a charging order on the share of the property you own.
Other people who live with you who don’t own the property can say they have a ‘beneficial interest’ in the property. This means the court must think about how a charging order or an order for sale will affect them.
The court needs to think about how making a charging order will affect all the people who live with you and if it will cause them hardship or suffering. This could make it harder for the creditor to get a charging order or an order for sale. That’s why it’s very important for the court to know about these people.
It’s also very important for the people you live with to know about the court hearings. A joint owner, husband, wife or civil partner should be given the chance to go to the court hearing and tell the judge how a charging order will affect them or any family members living with them.
The person you live with might want to tell the court
- why they shouldn’t lose their home when they don’t owe the debt
- there are children, or an older or disabled person living in the property – you can ask the court to attach a condition to the charging order saying the property can’t be sold until the children have grown up
- they need to stay close to work or school and if it would be hard to find other suitable housing in the area
- if they paid the deposit to buy the home
- if they’ve been making the mortgage payments
Paying off a charging order
If you pay off the amount you owe under the charging order, you can apply to the court for the order to be ‘discharged’ – this means the order doesn’t exist any more. Ask the court for a ‘certificate of satisfaction’ on your county court judgment and include evidence of payment.
You can use the certificate to get the Register of Judgments, Orders and Fines changed. This should make it easier for you to get credit.
It’s usual for creditors to tell the Land Registry that the interim and final charging orders have been discharged.