I am at risk of getting a charging order against my house, how can I stop this?
2 June 2010
Steven Jackson (about the author)
Securing debts against a homeowner’s property using a charging order is becoming increasingly common practise amongst creditors. We review the arguments you can employ to stop a charging order being granted by the court.
If you are a home owner and are struggling to repay unsecured debts, your creditors can make an application to the court to take out a charging order against your property.
In effect the charging order secures the debt against your home so when the property is eventually sold, the outstanding debt will be paid in full.
Note: Recent change makes applications for charging orders more likely:
Up until the 1st October 2012, a creditor was not able to apply for a charging order unless a County Court Judgement (CCJ) had already been issued and the terms of payment ignored. However, this is no longer the case. Now a creditor can apply for a charging order as soon as a CCJ is issued. It is therefore expected that the number of charging order applications will increase.
If an application for a charging order is made against your property. You can still try to defend against this.
Continue reading below...
Arguments which can be successfully used
Before a court will grant a charging order, there must be a hearing giving the opportunity for both sides to argue their case. If you want to stop a charging order being issued, you will need to attend this hearing at the court. You should prepare your arguments before arriving.
The following arguments can all be successfully used to persuade the judge not to issue the charging order:
Regular payments already being made - If you already have a Debt Management Plan in place, you should inform the judge that regular payments are being made to the best of your ability and that the implementation of a charging order is simply unnecessary. This is the most powerful argument that you can make. If you are not already making regular payments through a payment plan, you should be able to demonstrate that you are able to start doing so immediately.
Granting a charging order would favour the creditor in preference to others - Point out to the judge that you have other unsecured debts and if a charging order was granted, this would give preferential treatment to one creditor over the others. If this is the case, you could also point out that you have other larger unsecured creditors and they have accepted reduced monthly payments and frozen their interest and late payment charges.
Apply for a time order - If you have a County Court Judgement (CCJ) but you are unable to meet its terms of repayment, you can apply to reduce the required monthly payments and extend the length of time you are given to pay the debt. If a time order is granted, you will then be able to meet the payment terms of your CCJ and the court will not allow a charging order to be issued.
Request enforced payment in other ways - You could ask the judge to issue an attachment of earnings against you. Payments would then come directly from your wages ensuring that the debt is paid far sooner than if a charging order is issued.
You or a member of your family have a serious illness - If you have a serious illness or are caring for a relative who does, you should explain this situation to the judge. They may be more inclined to help you if they are aware of this situation especially if you can show that you are committed to a sensible monthly payment plan from now on.
What if a Charging Order is granted?
The threat of having a charging order issued against your property can be very worrying and stressful. However, if despite using the arguments outlined above, a charging order has been granted, there is no need to panic.
The creditor cannot automatically force the sale of your property. To do this would require a further order of sale which the court is extremely unlikely to give.
Nevertheless, it is important to remember that if a charging order is granted, you should make every effort to start repayments towards the outstanding debt rather than just ignoring it.
The creditor is allowed to add statutory interest of eight percent per year to the debt and so when you do come to sell your property, the amount you have to pay back could have significantly increased.
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