If you own a property, it’s important to understand that it can be subject to a charging order. A charging order is a type of court order that allows a creditor to secure a debt against your property. Essentially, it puts a legal charge on your property, which means that the creditor has the right to recover the debt owed to them from the proceeds of the sale of your property if you are unable to repay the debt.
If you have been served with a charging order on your property, you may be feeling overwhelmed and unsure of what to do next. In this article, we will discuss what a charging order is, how to deal with one, and what steps you can take to protect your property.
Understanding the Charging Order
A charging order is typically used as a last resort by a creditor to recover a debt that has not been paid. This can include unpaid credit card bills, personal loans, or other types of unsecured debt. The creditor will usually obtain a County Court Judgment (CCJ) against you first, which confirms that you owe the debt in question. If you still fail to pay the debt, the creditor can then apply for a charging order to secure the debt against your property.
It’s important to note that a charging order does not mean that the creditor can automatically take possession of your property. It simply means that if you sell your property, the creditor will be entitled to receive the proceeds up to the amount of the debt owed.
Dealing with a Charging Order
If you have received a charging order on your property, it’s important to take action as soon as possible. Here are some steps you can take:
- Seek Legal Advice
The first step is to seek legal advice. A solicitor who specialises in debt and property law will be able to advise you on your options and help you understand your rights. They may also be able to negotiate with the creditor on your behalf.
- Check the Validity of the Charging Order
It’s important to check the validity of the charging order. Make sure that the creditor has followed the correct legal process and that the amount of the debt is accurate. If there are any errors, you may be able to challenge the charging order.
- Pay the Debt
If you are able to pay the debt, you can do so to remove the charging order. This will ensure that your property is no longer at risk. If you are unable to pay the full amount, you may be able to negotiate a payment plan with the creditor. When you get this all fixed, you can also read this guide on how to remove a charging order from a property.
- Apply for an Order for Sale Hearing
If you are unable to pay the debt and the charging order remains on your property, the creditor can apply for an Order for Sale. This means that the court will order that your property be sold to pay off the debt. However, before this can happen, the creditor must apply for an Order for Sale hearing.
At the hearing, you will have the opportunity to present your case and explain why the property should not be sold. This may include demonstrating that the debt is not owed, that you have made efforts to repay the debt, or that the sale of the property would cause undue hardship.
- Consider a Voluntary Charge
If you are unable to pay the debt and the charging order remains on your property, you may be able to enter into a voluntary charge agreement with the creditor. This is where you agree to give the creditor a legal charge on your property in exchange for them agreeing not to apply for an Order for Sale. This can be a good option if you want to protect your property and avoid the stress and expense of an Order for Sale hearing.