A Charging Order is a legal tool which can be issued by the Court in England and Wales to turn a previously unsecured debt into a secured charge against your home or other assets that you own. It is extremely powerful.
Once in place a Charging Order 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 when you do decide to sell any outstanding balance will be paid using the proceeds of the sale.
How is a Charging Order issued?
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 Charging Order against your property as soon as they have been awarded a CCJ (County Court Judgement) against you. More information about the process of getting a Charging Order and how you can try to prevent one being issued in the first place is available here.
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Can interest be added to a Charging Order?
If a Charging 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 a Charging Order is issued. Further information about interest and Charging Orders can be found here as well as advice on how to apply for interest to be stopped if it is being added.
Can I sell my property once a Charging Order is 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 Charging Order debt. In these circumstances the creditor holding the Charge could block the sale. This situation and how to overcome it is explained in more detail here.
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