If you are a home owner and you get into arrears with your debt repayments your creditors are able to apply for a Charging Order. If they are successful this will to turn an unsecured debt such as a personal loan or credit card into a secured debt against your property.

In order to be at risk you must be a home owner. If you are living in rented accommodation or with a member of your family then there is no risk as you have no property to secure it against.

We explain how likely it is that you will get a Charge if you are a home owner and you start to struggle to repay your unsecured debts.

Worried about getting a Charging Order? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential

A County Court Judgement (CCJ) must first be issued

Before a creditor can apply for a Charging Order they must first apply for a County Court Judgement (CCJ) against you. Once a CCJ is granted the creditor can then automatically apply for a the Charge against your property whether or not you are making agreed payments towards your debt.

A creditor can still decide to apply for a CCJ and then a charging order against you even if you are paying into a Debt Management Plan (DMP). They would do this to get increased security over the debt you owe them.

Given you are making the agreed payments into your Plan regularly and on time it is unlikely that any of your creditors will then go on to apply for a CCJ against you. However it is possible. The best way to be certain that your home is protected is to start an IVA.

If you are a home owner and receive notification that a creditor is applying for a CCJ or Charge against your property, call use for advice. It may be sensible to start an IVA to protect your home.

If a Charging Order is issued will you be forced to sell your property?

Once issued a charging order has the effect of reducing the equity in your property however it is very unlikely that the creditor will then be able to force you to sell. In order to do this they would require an Order of Sale from the Court.

Generally courts want to avoid the forced sale of property. Most creditors understand this but they are still keen to apply for a charging order simply to ensure that their debt becomes secured and will eventually be paid in full when the property is sold.

This protection has become far more important for creditors in the last 5 years. During this time, the number of people resolving their debts with and Individual Voluntary Arrangement (IVA) or Bankruptcy has significantly increased.

Once implemented these solutions will mean that unsecured creditors will have to write off a significant amount of the debt they are owed. If the debt has been secured against a property that risk all but disappears. As such it is no wonder that creditors are taking action to secure unpaid debts where they can.

Given this, if you are a home owner, it is very important to understand the risk of receiving a charging order and that this is a very real possibility if a CCJ is issued against you.