Charging Order

If an individual owes an amount of money to a creditor, they may take that person to Court and obtain an Order against them to pay back the money that they owe. A Court Order will usually specify that the individual is to make regular payments or pay the whole debt off by a certain time.

If the individual does not abide by the terms of the Court Order, the creditor has a number of options available; one of these is to obtain a Charging Order.

A Charging Order secures the debt owed to the creditor against an individual’s home or other property. Once a Charging Order has been fixed against the property, the creditor has liberty to apply to the Court to force a sale of the property.

There are two stages that have to be fulfilled in order to obtain a Charging Order; these are an interim and final order. An interim order will be given by the Court to stop the individual from selling their property; it will have the same effect as putting a charge against the property in that the creditor would have to be notified if the property was sold. A final order will mean that if the individual did sell the property, the creditor would receive the amount he is owed out of the proceeds of sale. A final Charging Order does not mean that an individual is bound to sell their property, a further application to the Court will be necessary in order for the creditor to force the individual to sell.

Even if a creditor is able to make an individual sell their property there is no guarantee that they will see a return on the money they are owed. If the individual already has other charges against the property in the form of mortgages or other debts, these are to be paid off before the creditor receives their share of the sale of proceeds.

An individual may be able to argue that it would be unfair for the other people living in the home who would be severely affected by having to leave the home. This argument is only likely to stand up if the individual has young children or is looking after disabled or elderly people.

Even if a creditor successfully manages to obtain a final Charging Order against an individual they may still have some options available to them. The individual may be able to apply to the Court to have the final Charging Order set aside, ask for certain provisions to be included in the Order or to alternatively get the Order changed.

If the individual has joint ownership of the property and the debt owed to the creditor is in his sole name, the Charging Order can only be over half of the property. If the property and debt is in the sole name of the individual who owes the money to the creditor, the Charging Order will be made over the whole of the property.

This article kindly provided by Darlingtons Solicitors, who offer a range of advice from specialist litigation solicitors including advice on county court claims and enforcement of judgments.