What is a Charging Order?
A charging order is a legal process used to secure a debt owed to a creditor. It is a way for a creditor to secure a debt against an asset. The charging order essentially puts a lien on the asset and gives the creditor a right to be paid from the proceeds of the asset if it is sold. The asset is usually a house or other property.
It is an order of the court placing a ‘charge’ on the judgment debtor’s property, such as a house or a piece of land. The charge will be the amount the creditor is owed. The charging order will not normally get a creditor their money immediately, but it may safeguard their money for the future.
If the judgment debtor owns stocks or shares or has a fund or money, the court can also put a charge on these in much the same way as on property.
Can I Sell My Property if the is a Charging Order on the Property
A charge on a property means that if the property is sold, the charge has usually to be paid first before any of the proceeds of the sale can be given to the debtor. You should note, that a charging order does not compel the judgment debtor to sell the property. However it is possible for a creditor with a charge on a property to force a sale of the property! So, yes you can sell your property, but you should be aware that any charges against the property will be paid before you get the proceeds from the sale of the property
If there are already charges on the property when another charge is registered, for example, arising from a mortgage, then that charge will be paid first. There is a pecking order when it comes to charges being paid.
How Can I Stop a Charging Order
If the judgment debtor (or anyone else who has been served with the interim charging order), wishes to object to the making of a final order that person must file written evidence and serve a copy on you not less than 7 days before the hearing. It should be noted that the judgment debtor can make an application for the hearing to take place at another court nearer to his home or place of business.
The judge will consider the creditors application and any evidence the judgment debtor or any other person served with the application has filed. If objections have been raised, the judge can deal with them there and then, or give directions for a hearing later on. If the judge feels that the objections are justified, the application may be dismissed. If that happens the creditor may not be able to recover the fee they paid to issue the application, and they may have to pay the costs of the party who raised the objections.
Preventing a charge being placed against your property is very difficult to defend, however, it can be done. I would suggest contacting Citizens Advice. They will be able to advise you on what steps to take in order to prevent a charge being placed against your property.
Dealing with Debts to Prevent a Charging Order
Often charging orders come about because a debtor has failed to interact with a creditor. Creditors will know whether or not you own a property. So if you fail to deal with creditors, they will often go down the route of getting a Charging Order, thereby securing the debt. The best way of preventing this outcome, is to stay in constant contact with your creditors. You really need to come to some form of arrangement where the creditor(s) are in receipt of some form of monthly payment. Often a quick fix is to enter into a Debt Management Plan with your creditors.
