Charging Order: Unsecured Debt

Useless_with_wonga

Thought this might help anyone looking for information.


What is a Charging order?
A charging order is an order from the court placed on a debtor’s property (house or land) for monies owed to a lender.
If you have borrowed money and the money is not secured and you have not kept to the repayment arrangement, a lender can request the court to place a charging order on your property so that when the property is sold you will have to pay that debt off first before any of the proceeds are given to you.
In basic terms, the unsecured debt becomes secured on your property.
When can a lender apply for a charging order?
Before a court will consider an application for a charging order, the lender must have issued a county court judgement and you must have failed to make payments on that judgement or not paid the judgement according to the requirements of the court.
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What happens when I receive a charging order?
The lender will apply to the court for a charging order, once the court has considered the application and is satisfied with the application, you will receive the order on a N86 form.
The form will include information regarding the time and date of the hearing when the judge will decide if to make a final charging order.
If the judgement is put in place, you will receive a N87 form (Final Charging Order), this form will also be sent to the lender. The lender will then need to inform the Land Registry of the order.
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Will I be forced to sell my house or land?
You are not under any obligation to sell your property once the final charging order is in place, however, there are some extreme circumstances where a lender can apply to a court for force of sale. This is, however, rare and the court would have to agree to the application before such an order would be served

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National Debtline have a very useful factsheet:

Link: Factsheet | Charging orders in the county court

Plus, to help you (hopefully) minimize the risk of it ever getting that far:

Link: Factsheet | Replying to a county court claim form