A Charging Order is a legal tool which can be issued by the Court in England and Wales. It turns a previously unsecured debt into one which is secured against your home.

Jump to article contents:

• What is a charging order?
• How is the order issued?
• Can interest be added to a Charge
• Can I sell my property?

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What is a Charging Order?

A Charging Order is a very powerful debt collection tool. If a charge is issue the associated debt becomes secured against your property. If you do not pay the debt yourself it will be settled in full if and when you sell your home.

It can normally only be lifted if you pay the debt you owe in full or you settle it to the satisfaction of the creditor who applied for the Charge.

The fact that it has been issued does not mean that the creditor can then force you to sell your property. However you are still responsible for repaying the debt and interest may be added until it is paid.

How is a Charge issued against my Property?

The majority of Charging Orders are issued against property.

If you are a home owner one of your unsecured creditors can apply to the Court for a Charge against your property as soon as they have been awarded a CCJ (County Court Judgment) against you.

Can interest be added to a Charging Order?

If an Order is issued against your property whether or not the creditor can continue to charge interest will depend on the type of debt that you owe.

If the debt is regulated by the Consumer Credit Act or is for less than £5000 then normally additional interest cannot be charged.

However there are certain circumstances where interest can be added once an Order is issued. Where this is happening it might be possible for you to apply to the Court to have the Order changed and the interest stopped.

Can I sell my property once a Charge has been issued?

Once a Charging Order is issued against your property you can decide to sell at any time.

Once the sale has gone through any amount which is still owed against the Charging Order debt will be paid out of the equity in your property before the balance is transferred to you.

The only time when trying to selling your property will be a problem is if there is not enough equity to cover pay the outstanding debt. In these circumstances the creditor holding the Charge could block the sale.