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Tackling your debts

What is a charging order? Part 2

Posted 25 September 2015 by Christine Walsh

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Received a letter about a charging order? Our no frills guide will explain what a charging order is and your options for dealing with it.

What does a charging order mean for me?

If your creditor is successful in getting a charging order against you, it doesn’t mean that you have to sell your house straight away - you may not have to sell your house at all. It just depends on your individual circumstances.

Not all creditors would expect a payment once a charging order is in place. They may be happy to wait until the property is sold at some point in the future. They would only look into forcing a sale if they actually requested a payment once the charging order is in place and one was not made.

The charging order itself does not allow a creditor to force a sale. In order for them to do this they would need a further court order called an order of sale. You are able to argue against this being granted and the court would look into your situation before they allowed this to happen.

So, if your creditor applied for a charging order it does not mean that you will definitely lose the house that you live in. If you have a formal or informal arrangement with your creditors to deal with your debts, allowances would be made so that you could continue paying towards the debt in question and towards your other debts. It’s unlikely that you would be forced to sell if you put a plan in place to deal with the debt and were sticking to it.

 

 

What Arguments can be made against a charging order?

You may find yourself in a position where you feel you need to argue your case against a charging order and you are allowed to do this. The court has to look at all the details of the case before they grant a charging order or an order of sale, and they do care whether or not there are exceptional circumstances involved. For instance:

·         If a charging order would have a serious negative impact on other people that you already live, like children or a disabled relative, then you are able to raise this as an issue.

·         If other lenders have not thought it necessary to try and get a charging order then you are able to question why this particular creditor has tried to do this. If you are paying back your debts to your other lenders by instalments, and they are happy with the arrangement, then it may be possible for you to do the same with this creditor. This argument will be made stronger if the other creditors that are not trying for a charging order are owed more money.

·         You can suggest that there are other ways that you could pay back the debt without having a charging order against you. You could pay it back in instalments, for instance. If your job isn’t put in jeopardy by you being in debt, then you could even suggest that the creditor takes the monthly instalment straight from your wages before you receive them – called an attachment of earnings. A time order is another option, this extends the length of time that you have to repay the debt overall, and in some cases can affect the amount of interest that you pay.

Conditions on a charging order

If a lender is successful in getting a charging order against you, there are things that you can do to lessen its immediate impact. These are called conditions and you would have to ask the court to attach them to the order and have solid reasons why they should be given.

An example of a condition would be the court not allowing your creditor to force you to sell your home while your children are still in school.

 

 

We hope that this has cleared things up if you’re in the position where a creditor is already trying to get a charging order against you. But remember, debts don’t have to get to this stage! If you’re in serious debt then it might be the right time to consider a solution, so that you can avoid court action altogether. Lenders are normally reasonable if they can see that you are making an effort to repay your debt. Make sure that you reach out and get advice by using the options to the left of the page. 

by Christine Walsh

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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.