Charging orders – Advice Network

If your creditor has taken you to court for a debt, they might have a county court judgment (CCJ) or other court order against you. This means the court has ordered you to pay back the money you owe. A court order means you have to either:

make regular payments to your creditor
pay off the whole debt by a certain date

When your creditor has a court order against you, they can apply for another court order that secures the debt against your home or other property you own. This is called a ‘charging order’. If you own your property jointly with someone else but the debt is only in your name, the creditor can only get a charging order for your share of the property – this is known as your ‘interest’. A charging order is very serious – you could lose your home if you don’t pay back what you owe. After your creditor gets a charging order, they can usually apply to the court for another order to force you to sell your home. This is called an ‘order for sale’. If your creditor tries to get a charging order or an order for sale, you should contact us for help. You can also get more information about CCJs and court orders.

Get breathing space if you need more time to decide what to do

The government-backed breathing space scheme could give you more time to decide how to deal with your debt. You can get breathing space at any time. If you’re eligible, you could get 60 days of breathing space where your creditor can’t:

evict you
contact you
take action to make you pay
add interest and charges to the debt

If you get into further arrears after you start your breathing space, your creditor can still contact you about those. You can usually only have breathing space once every 12 months. Talk to an adviser to see if you can get breathing space.

When a creditor can apply for a charging order

Your creditor can only apply for a charging order if they’ve already got a county court judgment (CCJ) against you. After they get the CCJ, your creditor must apply to the court again to get a charging order. The rules about when a creditor can apply for a charging order changed from 1 October 2012. You should check:

the date your creditor applied for the original CCJ
the date the CCJ was granted
what the CCJ says about repayments

If your creditor got a charging order before 1 October 2012

If your creditor got a CCJ before 1 October 2012, they can only apply for a charging order if either:

you missed the deadline for paying the whole debt
you’re paying the debt in instalments and you’ve missed a payment

If the creditor applies for a charging order and you haven’t missed a payment deadline, you should go to the court hearing. You can give evidence to the judge to show you’ve kept to the terms of the CCJ. If you’ve missed some payments, try to catch up with them before the hearing. If you do this, you won’t get a charging order.

If your creditor got a charging order after 1 October 2012

If your creditor got a CCJ on or after 1 October 2012, they can apply for a charging order straight away. This applies even if you are up to date with payments under the CCJ.

How a creditor gets a charging order

The application for a charging order always has two stages. First your creditor has to get an ‘interim order’ and then a ‘final order’. The court usually grants an interim order to stop you selling your property without your creditor knowing before the final order can be made. If a court grants your creditor a final charging order, this means that if you sell your property, you must pay your creditor back out of the proceeds. If your creditor gets a final charging order, this doesn’t mean you’ll have to sell your property. If your creditor wants to force you to sell your property, they’ll have to apply to the court for a further order called an ‘order for sale‘. You can argue against your creditor being given a final charging order or an order for sale. You can also ask the judge to attach conditions to the final charging order- this makes it harder for the creditor to force a sale.

Interim charging orders

An interim charging order is usually made by a court officer without a hearing. There’ll only be a hearing with a judge if either:

you’re up to date with an instalment order that was made before 1 October 2012
the court officer thinks there’s a reason the application should be considered by a judge

If the decision is made by a court officer, your creditor has to send you a copy of the interim order within 21 days of the order being made. Your creditor should also send a copy of the interim order to:

the joint owners of the property – if there are any
your spouse or civil partner – even if they aren’t a joint owner
your other known creditors

If the decision is made by a judge, they can either:

refuse to make an interim charging order
make an interim charging order
make an interim charging order and set a hearing date at your local county court – at the hearing a judge will consider whether to make a final charging order

When your creditor applies for an interim charging order, they’ll also register a charge on your property at the Land Registry. This means you can’t sell your property without your creditor knowing about it. If you can pay back the debt in full at this stage, you can get the charge removed from the Land Registry. To get advice about getting a charge removed from the Land Registry, contact us.

Final charging orders

After you’ve been served with an interim charging order, you have 28 days to object to a final charging order. You must send your objection in writing to the court and the creditor. If you send an objection, there’ll be a hearing at your local county court, and a judge will decide whether to make the final charging order. If you don’t send any objections, the judge will decide whether the charging order can be made final without a hearing. If a judge has already arranged a hearing after making a decision about the interim charging order, you must send your objection to the court and the creditor at least 7 days before the hearing. You should go to the hearing. If you can’t, you should explain this to the court and ask for a different hearing date. If you don’t go to the hearing, the court is likely to make the order final. At the hearing, the judge will:

look at the evidence you’ve sent to say why you don’t want a charging order to be made
look at the arguments made by your creditor
decide whether to make a final charging order after considering the evidence from both sides

If the court grants a final charging order, your creditor can wait until you sell your property or apply to the court for an order for sale if they want you to sell your property straight away. You might be able to use some arguments to persuade the judge not to grant your creditor a final charging order. The judge might also agree to attach conditions to the charging order – this stops or makes it harder for your creditor to force you to sell your property. To get help putting your arguments to the court or asking for conditions to be attached to the charging order, contact us.

Stopping a final charging order being made

At the hearing for a final charging order, the court must consider all the circumstances of the case before it decides if it will make the order. Your personal situation is very important. You might be able to use one of the following arguments to persuade the judge not to make a charging order – but in most cases a final charging order will be made.

If your creditor didn’t serve the interim charging order to the correct people

When an interim charging order is made against you, your creditor must send you a copy of the order within 21 days. They should also send a copy of the order to any:

joint owners of the property
your spouse or civil partner
your other known creditors

If your creditor didn’t serve the interim order to all of the people they should have, the court shouldn’t grant a final charging order.

If you haven’t missed instalment payments

For county court judgments made since 1 October 2012, the judge will consider whether you’re up to date with any regular payments. If you’ve missed payments, they’re more likely to make a charging order against you.

There’s very little or no equity in your property

Equity is the amount of profit you’d make on your home after you sell the property and pay off your mortgage. If there’s little or no equity in the property, your creditor wouldn’t get their money back if it was sold.

Other creditors aren’t asking for a charging order

If you have more than one creditor, the others might have agreed to let you pay back their debts by instalments, instead of asking for a charging order. You might be able to argue that you shouldn’t have to grant one creditor a charging order if none of the others think it’s necessary – especially if you owe the other creditors more money.

A charging order is unfair on other people who live with you

You might be able to argue that other people who live with you would be severely affected if you had to sell your home. For example, think about the effect it might have on any children, older people or disabled people you live with. If you own the property with someone else but the debt is only in your name, you can argue that it’s not fair on the joint owner for the property to be sold.

A charging order is unfair on your other creditors

If you have other creditors, you could ask them to object to a final charging order because it would be unfair on them. If you’re likely to be made bankrupt, you could argue that a charging order would give the creditor an unfair advantage over other ‘unsecured’ creditors. These are other people you owe money to but who don’t have a clear way to get it back. For example, unsecured creditors can’t make you sell your house to pay them back.

What can you do once a final charging order is made

If the court decides to grant a final charging order, you might be able to:

apply for the order to be ‘set aside’
ask for conditions to be attached to the charging order
get the charging order changed

Applying for the charging order to be set aside

If a final charging order has been made, you might be able to apply to the court to have it set aside. This means the debt goes back to the judgment stage and your creditor will have to reapply to the court if they want to take further action. This can give you more time to repay your debt. You can only do this if you think the court didn’t consider your circumstances properly. You must make this application as soon as possible after the charging order is made final. Download the N244 court application form on GOV.UK. It can be very difficult to get the charging order set aside. To get advice on what to do, including help to fill in the court form, contact us.

Asking for conditions to be attached to the charging order

You might be able to ask the judge to stop your creditor from forcing you to sell your property straight away. This is called ‘attaching conditions’. For example, you can ask for either:

your property not to be sold while your children are still at school
the final order to be suspended as long as you keep to an agreed repayment plan

There might be other conditions you can ask for, depending on your personal circumstances. To get specialist help to put your arguments to the court and to ask for conditions to be attached to the charging order, contact us.

Getting a final charging order changed

If the charging order has conditions attached, you might be able to ask the court to change them if your financial circumstances change. For example, the charging order may say you have to pay back your creditor in instalments. You can ask the court to change the amount of the instalments or the date the final instalment has to be paid. Get more information about changing a court order for debt. To get advice about how to get a charging order changed, including help filling in the court form, contact us.

What happens if there’s an order for sale

When your creditor has been granted a final charging order, they can apply for an order for sale. This is a court order that forces you to sell your property and use the money you make from the sale to pay your charging order debt. There will be another court hearing and it’s very important for you to go. The court will decide whether to make an order for sale or not. A creditor can’t get an order for sale if both:

you owe less than £1,000 – including any court costs
your debt is covered by the Consumer Credit Act – check which debts are covered by the Consumer Credit Act

An order for sale is very serious and legally complicated. You should contact us as soon as possible if your creditor tries to get an order for sale against you. You can also check if you can get affordable legal help.

If you were ordered to pay your debt by instalments

Your creditor can’t get an order for sale if:

the county court judgment was made on or after 1 October 2012
you were asked to pay in instalments
you’re up to date with your payments

If you missed any payments, try to pay them before you have to go to court – this will stop your creditor getting an order for sale.

Why a creditor decides to apply for an order for sale

After they’ve got a charging order, your creditor might agree to wait for you to sell your home when you’re ready. Other creditors might apply for an order for sale straight away. They can do this even if you owe them a fairly small amount of money compared to the value of your home. Whether or not a creditor is prepared to wait depends on how quickly they want their money back. They might also take one or more of the following things into consideration:

if you can pay the money back another way within a reasonable time – for example, you might be able to make regular payments or raise a lump sum to clear the debt (if your creditor gave you time to pay the money back when the final charging order was made and you didn’t keep to the agreement, they’ll probably apply for an order for sale)
if there are other mortgages or secured loans to be paid from the proceeds of the sale – if other debts need to be paid off first, your creditor might not gain anything by making you sell your home
how much equity there is in the property – equity is the amount of profit you’d make on your home when the property is sold and the mortgage is paid off (if there’s little or no equity in the property, it may not be worth the creditor forcing you to sell it)
if they think you haven’t paid the debt even though you can
if they think forcing you to sell your property is the only way of getting their money back

Sending your evidence to the court

If your creditor decides to apply for an ‘order for sale’, you’ll be asked to go to a court hearing. It’s very important you go to the hearing so you can tell them about your situation. The court will send you:

a copy of the claim form that the creditor filled out
an ‘acknowledgment of service’ form

You’ll have 14 days to send the acknowledgment of service form back to the court, along with any written evidence. You should also send a copy of the form and evidence to your creditor. If you need more time to send your evidence, write to your creditor. You can ask for up to 14 more days. If you don’t send your acknowledgment of service form back to the court, you won’t be able to take part in the court hearing. If you miss the deadline to send back your form, you can ask the court for more time. You’ll need to fill in the N244 form and pay £275 – download the N244 court application form on GOV.UK. Check if you can get help with court fees on GOV.UK.

How your creditor should reply to your evidence

Once you’ve sent your evidence, your creditor will have 14 days to reply with more evidence to support their case. Your creditor might ask you for up to 28 more days to reply. If you don’t agree to let your creditor have more time to reply to your evidence, they can ask the court. If the court agrees, you might have to pay for the costs caused by this process. If you’re not sure if you should allow your creditor to have more time, speak to your solicitor if you have one. You can also talk to an adviser.

Get specialist support before you go to court

The legal situation can be very complicated and you might be able to make a number of legal and personal arguments why the property shouldn’t be sold. Try to get specialist advice as soon as possible. If you can, take a legal representative with you to the court hearing, like a specialist adviser. You might be able to get help with your legal costs.

How the court decides to grant an order for sale

The court can order a sale if either:

the property and debt are in your name only
the property has joint owners and the debt is in both your names
the property is jointly owned but the debt is in your name only – but it might be harder for your creditor to get an order for sale

If there are joint owners of the property but the debt is only in your name, it might be more difficult for the creditors to get an order for sale. This means it’s really important for all joint owners to go to the court hearing for the order for sale, so they can explain their situation. This includes a husband or wife who isn’t a joint owner, but who lives in the property and might be entitled to a share in its value – this is called a ‘beneficial interest’. The court can decide it’s unfair to force someone who wasn’t responsible for the debt to leave their home. It will also look at the interests of the whole family and decide if these are more important than those of the creditor. Some of the things it will take into account include:

if there’s enough equity in the property to pay off the mortgage and the charging order debt – if not, it might not be worth forcing you to sell your home
the reasons you bought your home – for example, if it’s a family home or an older or disabled person lives there
the wellbeing of any children – for example, what the effect of moving would be, or if a child is ill or disabled
if there are other ways you can pay back the debt, for example through an installment order, administration order or an attachment of earnings order

If any of these things apply to you, you should make sure the court knows about them. You can still make an offer of payment at this stage and ask the court not to order a sale as long as you keep up with the payments. You should provide a full financial statement of your circumstances. You can ask the court to postpone the order for sale proceedings or ‘suspend’ the order. A suspended order means the order for sale will be delayed – for example, until your children are grown up. Use a budgeting calculator to create a financial statement to give to your creditors.

If the court makes an order for sale

If the order for sale is made and not suspended, you’ll normally be given 28 days to pay the debt or leave the property. If you don’t pay the debt or leave the property within 28 days, your creditor can apply for an order to force you to leave the property. This is called a ‘warrant of possession’. Read more about what happens if your creditor gets a warrant of possession.

How a charging order affects the people you live with

If you have joint ownership of your property with someone and the debt is in both your names, the court can make a charging order on the whole property. If the debt is only in your name and the property is in joint names, the court can only make a charging order on the share of the property you own. Other people who live with you who don’t own the property can say they have a ‘beneficial interest’ in the property. This means the court must think about how a charging order or an order for sale will affect them. The court needs to think about how making a charging order will affect all the people who live with you and if it will cause them hardship or suffering. This could make it harder for the creditor to get a charging order or an order for sale. That’s why it’s very important for the court to know about these people. It’s also very important for the people you live with to know about the court hearings. A joint owner, husband, wife or civil partner should be given the chance to go to the court hearing and tell the judge how a charging order will affect them or any family members living with them. The person you live with might want to tell the court

why they shouldn’t lose their home when they don’t owe the debt
there are children, or an older or disabled person living in the property – you can ask the court to attach a condition to the charging order saying the property can’t be sold until the children have grown up
they need to stay close to work or school and if it would be hard to find other suitable housing in the area
if they paid the deposit to buy the home
if they’ve been making the mortgage payments

Paying off a charging order

If you pay off the amount you owe under the charging order, you can apply to the court for the order to be ‘discharged’ – this means the order doesn’t exist any more. Ask the court for a ‘certificate of satisfaction’ on your county court judgment and include evidence of payment. You can use the certificate to get the Register of Judgments, Orders and Fines changed. This should make it easier for you to get credit. It’s usual for creditors to tell the Land Registry that the interim and final charging orders have been discharged. Read more about changing an entry in the Register of Judgments, Orders and Fines.

Get help with bills and budgeting

If you’re trying to cut your spending, or having problems with your outgoings, you could get help with bills. You could also use a calculator to work out your budget to see exactly where your money goes each month.