If you’ve fallen behind on debt repayments and a creditor has taken legal action against you, you may come across the term charging order. For homeowners, receiving notice of a charging order can be particularly concerning because it links a debt to your property.
While a charging order does not mean you’ll immediately lose your home, it can have serious implications and is something that should be dealt with as early as possible.
A charging order is a court order that secures an unsecured debt against a property that you own.
In simple terms, it turns a debt that was previously unsecured into one that is secured against your share of a property.
A creditor will normally seek a charging order after obtaining a County Court Judgment (CCJ) against you.
If granted, the charging order means:
- The debt becomes linked to your property
- The creditor may be entitled to recover money from the proceeds of a future sale
- The charge is registered against the property
- The debt remains outstanding until it is repaid
A charging order does not automatically mean your home will be sold, but it does give the creditor additional security.
What Kinds of Debts Are Charging Orders Used For?
Charging orders are most commonly associated with unsecured debts.
Examples may include:
- Credit card debts
- Personal loans
- Store card balances
- Catalogue debts
- Some business-related debts
- Overdrafts
Before a charging order can usually be considered, the creditor will typically need to:
- Obtain a County Court Judgment
- Demonstrate that the debt remains unpaid
- Apply to the court for a charging order
Not every debt will result in a charging order, but creditors may pursue one where significant balances remain outstanding.
What Is the Process of Getting a Charging Order?
There are several stages before a final charging order can be granted.
- County Court Judgment (CCJ)
The creditor first obtains a CCJ confirming that the debt is owed.
- Interim Charging Order
The creditor may then apply for an Interim Charging Order.
This is a temporary order that secures the debt while the court considers the application.
The court will normally notify:
- The debtor
- Other interested parties
- Any joint owners of the property
- Final Charging Order Hearing
The court may then schedule a hearing to decide whether a Final Charging Order should be granted.
At this stage, the court can consider:
- The circumstances of the debt
- Any objections raised
- The impact on other parties
If approved, the Final Charging Order is registered against the property.
Can You Stop a Final Charging Order?
In some circumstances, objections can be raised before a Final Charging Order is granted.
Whether the court agrees with those objections depends on the individual circumstances.
Factors that may be considered include:
- The amount of equity available
- Whether the property is jointly owned
- The impact on other occupants
- Any procedural issues with the application
It’s important to seek advice as early as possible if you’re facing a charging order application, as opportunities to challenge the process may become more limited once a Final Charging Order is in place.
How Long Does a Charging Order Last?
A charging order does not usually have a fixed expiry date.
In many cases, it remains attached to the property until:
- The debt is repaid
- The property is sold
- The creditor agrees to remove the charge
Because the debt is secured against the property, it can remain in place for many years.
This means that even if no immediate action is taken, the creditor may still have an interest in the property when it is eventually sold or transferred.
How Do I Remove a Charging Order from My Property?
The most common way to remove a charging order is by paying the debt in full.
Once the balance has been cleared, the creditor can arrange for the charge to be removed from the property’s records.
In some situations, a charging order may also be removed if:
- The debt is settled through negotiation
- The order was made in error
- A court directs that it should be discharged
If the property is sold, the debt secured by the charging order is usually dealt with as part of the sale process.
It’s important to obtain confirmation that the charge has been properly removed once the debt has been resolved.
Does a Charging Order Mean You Will Lose Your Home?
Many people assume a charging order automatically leads to repossession, but this is not the case.
A charging order and an order for sale are two separate legal processes.
A charging order simply secures the debt against the property.
In some circumstances, a creditor may later apply for an Order for Sale, but this is a separate application that would need to be considered by the court.
The court will often take several factors into account before deciding whether such action is appropriate.
Can a Charging Order Affect Remortgaging?
Yes, a charging order can affect future borrowing.
Because the debt is secured against the property, mortgage lenders may take it into consideration when assessing applications.
This could potentially impact:
- Remortgage applications
- Borrowing capacity
- Future lending decisions
- Property transactions
The extent of the impact will depend on the lender and your overall financial circumstances.
What Should I Do Now?
If you’re struggling with debt, have received a CCJ, or are concerned about a charging order, professional advice can help you understand your options.
At My Debt Plan, we help people find practical solutions to debt problems and regain control of their finances.
Get debt help online or speak to our team for a confidential conversation on 0161 464 0870.
