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Charging Orders - What is a Charging Order?

A charging order is one of many options that a creditor might employ as a means of enforcing a CCJ. Charging orders work by securing an unsecured debt against a debtor's property or other assets. This is known as placing a charge on the property or asset.

From the point of view of the creditor, a charging order will not get them their money right away. What it means is that in the event that the asset or property is sold, then the charge has to be paid to the creditor before any of the proceeds from the sale go to the debtor.

A charging order does not mean that you are being forced to sell a property.

In the event that a debtor has other assets of value, then the court may choose to put a charge on these instead.

In the event that there are already loans secured on the property before the charging order has been instituted, then the original loan will have to be repaid first before the creditor gets any of the money.

Interim and Final Charging Orders

Charging Order applications are typically dealt with without a hearing. A district judge handles them. In the event that you are satisfied with the application, then the district judge will then make an Interim Charging Order. This immediately places a charge over the debtor’s assets to which the application relates. This is so the asset cannot later be disposed of before the charging order is fully in place. The district judge will then set a date for a hearing to consider whether it is necessary to make a Final Charging Order.

When can someone apply for a Charging Order against me?

A creditor may file a charging order against you when you have failed to pay the full amount of a judgment upon its due date. A charging order may also be filed against you in the event that you have failed to pay one or more of the installments that were due under the terms of the judgment.

How can I contest a charging order made against me?

It is the court’s decision as to whether or not a charging order is reasonable. The court must consider all of the case’s circumstances before making that decision.

Here are some of the factors that the court may take in to consideration:

• Has any member of your family a disability or serious illness?
• If you have multiple debts, making a charging order in favor of one creditor would give them unfair priority over other unsecured creditors. It is particularly useful if you can show you already have a payment arrangement in place with your other creditors that would be upset by a charging order. Your creditor has a duty to list all the other creditors that they are aware of in the application for an interim charging order.
• The court can order the interim order to be sent to the other known creditors, but does not have to do this. This means that creditors who may want to object to the final charging order will not know about the hearing. You can raise this in your written objections and at the hearing if you think a creditor may be unduly prejudiced by the charging order.
• Could the creditor have given you a secured loan when you first took out the loan? If they decided to offer an unsecured loan instead, this could be particularly relevant if you have other unsecured creditors who may be disadvantaged by a charging order.
• There are other ways the court could enforce payment of the debt. You could ask the court to make an installment order so you make monthly payments you can afford, or an attachment of earnings order so that the installments would come directly from your wages. This is only useful if you are employed and your employment would not be at risk.
• If your debt is covered by the Consumer Credit Act, which is more than likely, you can apply for a Time Order. A Time Order can change the monthly payments and extend the length of time you have to pay the debt.
• For debts under £5,000 in total to all creditors, you can argue that the debt should be included in an administration order rather than a charging order.
• If bankruptcy is looming, you can argue that a charging order would give the creditor an unfair advantage over other unsecured creditors.
• If your have negative equity in your property, then you can argue it is not worth a charging order being made, as the creditor would not be paid off, even if they forced your home to be sold.
• You should point out any particular hardship that your family would suffer if a charging order were to lead to the sale of the home. This is particularly important if the debt is in your name but you own your home jointly so it is not even your partner's debt.