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What is a charging order?

Posted 20 February 2013

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What is a charging order? What happens if one is made against you? Is there anything you can do?

If your lender has a CCJ (County Court Judgement) or other court order against you, they might be able to apply for a charging order.

A charging order makes your unsecured debts (like credit cards and personal loans) into secured debts, meaning if you still don't repay them you could lose your home.

The stages of a charging order

There are two main stages to a charging order:

•  An interim order is usually granted by the courts to stop you from selling your home without your lender knowing.

•  If your lender wants to force you to sell your property, they can apply for an order for sale.

Can I stop a charging order being made against me?

You will be invited to court to present your arguments against a charging order. For example, you could argue that:

•  There is little or no equity in your property - so the lender wouldn't get their money back if it was sold.

•  Your other lenders aren't asking for a charging order. For example, they may ask you pay them back by instalments instead. You can say that you shouldn't have to give one lender a charging order if none of your other lenders think it's necessary.

•  Your other lenders have priority - so even if you did sell your home, they would be paid before the lender asking for the charging order.

•  A charging order would be unfair on the people living in your home - for example children, older people or people with disabilities who'd be affected if you had to move out.

•  You can repay the debt in another way. For example, you could offer to repay what you owe in instalments you can afford, or your lender could take what you owe out of your earnings, or you could pay what you owe to the courts.

If a charging order is made against you, you can ask for it to be 'set aside', which would give you more time to repay what you owe. You could also ask for conditions to be made on the charging order, which would stop your lender forcing you to sell your property right away.

For example, you could ask to keep your property until your children have finished school, or ask them to suspend a final order if you set up a payment plan.

What happens if an order for sale is made?

If you don't manage to avoid an order for sale being made against you, you'll usually be given 28 days to either repay what you owe or leave your property.

How can charging orders be avoided?

If you're struggling with your unsecured debts and you have received warnings from your lenders, you may be worried about a charging order being made against you.

Luckily, charging orders are usually a last resort after all other options have been tried.

If you can no longer afford to repay what you owe, get in touch with your lender and let them know about your situation. If you agree an alternative repayment plan with them, you could make more affordable payments and avoid having to sell your home.

Seeking expert debt advice could help you to figure out which debt solution is best for your situation. Click here to see how the Debt Advisory Centre could help.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.