What is a Charging Order? debt-simple

Charging Order

What is a Charging Order?

‘A charging order is an order from the court placed on a debtor's property (house or land) for monies owed to a lender. In basic terms, the unsecured debt becomes secured on the debtor's property.'

Charging Orders Explained

Unsecured to Secured

If you have unsecured borrowing and you have not kept to the repayment terms set out by the lender, they can request the court to place a charging order on your house or land. So when the property is sold you will have to repay your debt before any proceeds are given to you.

County Court Judgement

Before a court will consider an application for a charging order from your lender you will have been issued with a CCJ and failed to make repayments in accordance with the court.

What happens when you receive a Charging Order

Lender will apply to court for a Charging Order. Court will consider the application, once satisfied you will receive a N86 form. The form includes date and time of hearing where judge will decide if to make a Final Charging Order.

Once Charging Order is in place.

You will receive a N87 form (Final Charging Order) the same will be sent to your lender. The lender will then inform the Land Registry of the Charging Order. You are not under any obligation to sell your property (in some extreme circumstances they can apply to the court for force of sale).

It is always important to seek debt advice if a creditor is taking legal action to recover the monies owed and this should be taken seriously.