Orders for the collection of debts.
In the event that a creditor brings you to court for a debt, they may obtain a county court judgment (CCJ) or other form of court order against you. In this scenario, the court has directed you to repay the outstanding amount owed, which you must do by either making regular payments to your creditor or fulfilling the debt by a specific date.
Once your creditor obtains a court order against you, they may request another court order against your home or other property that you possess. Known as a "charging order," this secures the debt in question. In situations where you own property jointly with another person, but the debt is in your name solely, your creditor may obtain a charging order for your share of the property, referred to as "your interest."
It is crucial to note that a charging order carries significant repercussions, potentially resulting in you losing your home if the debt remains unpaid. After your creditor gains a charging order, they may typically petition the court for an additional order to compel you to sell your property, known as an "order for sale."
In the event that your creditor seeks a charging order or an order for sale, it is recommended that you contact your nearest Citizens Advice for assistance. Furthermore, more information about CCJs and court orders is available on the Citizens Advice website.
Your creditor may only request a charging order if they have already obtained a county court judgment (CCJ) against you. Subsequently, after your creditor gains a CCJ, they must reapply to the court to obtain a charging order.
It is worth noting that the eligibility criteria for when a creditor may request a charging order changed on 1 October 2012. You must verify the date your creditor requested the initial CCJ, the date the CCJ was issued, and the details of the repayment plan outlined in the CCJ.
If your creditor acquired a CCJ before 1 October 2012, they may apply for a charging order only if you missed the payment deadline or have defaulted on an installment payment. If they apply for a charging order, and you've met all payment deadlines, you should attend the court hearing and present evidence to the judge demonstrating that you've adhered to the CCJ's terms.
If you've missed payments, it is advisable to catch up with them before the hearing. This will ensure that you avoid a charging order.
If your creditor obtained a CCJ on or after 1 October 2012, they may request a charging order straight away, even if you've met all payment obligations under the CCJ.
A charging order application always involves two stages: an interim order and a final order. The court usually issues an interim order to prevent you from selling your property without your creditor's knowledge before the final order is issued.
If the court grants your creditor a final charging order, you will be required to pay your creditor from the proceeds if you sell your property. This does not necessarily imply that you must sell your property. If your creditor wishes to compel you to sell your property, they must apply to the court for an order for sale.
You may contest your creditor obtaining a final charging order or an order for sale, and you may request that the judge attaches conditions to the final charging order to make it more challenging for the creditor to force a sale.
Regarding interim charging orders, your creditor may request them to prevent you from selling your property without their knowledge before obtaining a final order.
Typically, an interim charging order is granted by a court officer without holding a hearing. However, a hearing with a judge may occur if one of two conditions is met: You comply with an installment order made before October 1, 2012, or the court officer believes the application necessitates consideration by a judge. If the verdict is issued by a court officer, the creditor must furnish you with a copy of the interim notice within 21 days of the said order being granted. Conversely, if a judge hands down the ruling, they may choose to decline, establish, or deliver an interim charge order and arrange a hearing at your local county court. Further, at the hearing, the judge will determine whether to provide a final charging order. Once a creditor obtains an interim charging order, they must register it with the Land Registry and, as a result, you cannot sell your property until the debt is paid back in full. Nonetheless, the charge may be removed from the Land Registry if the loan is fully repaid during this stage.
After receiving the interim charging order, you have 28 days to object to a final charging order, and you must do this in writing to the court and creditor. If you choose to object, there will be a hearing presided over by a judge at the county court, who will evaluate and decide whether to issue the final charging order. In case you fail to object, the judge may make the ruling conclusive without holding a hearing. Conversely, if the judge schedules a hearing for after rendering the interim charging order decision, you must forward your objection to the creditor and the court at least 7 days before the hearing. At the hearing, the judge will scrutinize the evidence you present in support of why you do not want a charging order to be issued and your creditor's argument before deciding whether to grant the final charging order. If the court endorses a final charging order, your creditor may wait until you dispose of your property yourself or request an order from the court to sell the asset immediately.
You could use particular arguments to convince the judge not to authorize your creditor's final charging order. Further, the judge may concede to imposing some conditions on the charging order, restricting or hindering the creditor from forcing you to sell your property. To obtain assistance in presenting your arguments to the court or asking for conditions to be imposed on the charging order, you can contact your nearest Citizens Advice. During the hearing for the final charging order, the court evaluates all the facts of the case before making a decision on the issued order, and your personal circumstances play a crucial role.
If you are facing a charging order, there are a few arguments you may be able to make to prevent the judge from issuing a final order. However, in most cases, a final charging order will be made.
For county court judgments made since October 1, 2012, the judge will consider whether you have missed any installment payments. If you have, it is more likely that a charging order will be issued against you.
If there is very little or no equity in your property, your creditor will not receive their money back if the property is sold. If you owe multiple creditors, it is possible that they have agreed to let you pay back their debts in installments and not requested a charging order. This may be used as an argument to grant other creditors a charging order lest you owe them a greater amount of money. Similarly, you may argue against a charging order if you can demonstrate that it would be unfair to others living in the property or on any joint owner. This is especially true if one creditor is granted an advantage over other claimants or if there are other unsecured creditors.
In the event that a final charging order is made, you may apply for it to be set aside or request conditions to be attached to the charging order. Setting aside the charge should be done as soon as possible after the charge is made final and only if it is believed that the court did not consider the circumstances properly. It can be complicated to have the charge set aside, so it is recommended that you seek advice. To have conditions attached, one may request that the creditor not force the sale of the property until certain conditions are met. You may also ask for the final order to be suspended if you keep to an agreed repayment plan. Seek specialist advice to formulate a good argument or to complete the court forms properly.
Modifying a Final Charging Order
If the charging order that has been issued contains certain terms and conditions, it is possible to ask the court to make alterations to these conditions if there has been a significant change in your financial status.
For instance, the order may require you to repay your creditor in installments. However, you may request the court to make changes to the payment amount or to the deadline for the final installment.
Visit the website for additional information on changing a court order for debt.
To obtain guidance on how to modify a charging order, including help with filling out the court form, please consult with your nearest Citizens Advice Bureau.
What Happens When an Order for Sale is Issued?
Once your creditor has received a final charging order, they may apply for an order for sale which directs you to sell your property so that the proceeds can be utilized to fulfill your charging order debt.
You must attend another court hearing, and it is critical that you be present. The court will determine whether or not to issue an order for sale.
A creditor cannot obtain an order for sale if:
- you owe less than £1,000, which includes court expenses
An order for sale is a serious matter with legal implications. Contact your nearest Citizens Advice Bureau without delay if your creditor attempts to implement an order for sale against you.
You may also check if you are eligible to receive affordable legal assistance.
If You Were Ordered to Pay in Installments
- the county court judgment occurred on or after October 1, 2012
- you were requested to pay in installments
- you have paid all installments on time
- then your creditor cannot obtain an order for sale.
- If you have missed any payments, attempt to settle them before your scheduled court appearance to prevent your creditor from obtaining an order for sale.
After a charging order is granted, your creditor may be willing for you to sell your property at a time that is convenient for you. But some other creditors may seek an order for sale immediately. This is possible even if you owe them a lesser sum than the total worth of your property.
Whether or not your creditor is willing to wait is determined by how rapidly they want their money back. In addition, they may take into consideration one or more of the following:
if you can pay the money back by another means within an acceptable time, such as if you can make regular payments or raise a lump sum to clear the debt (if your creditor allowed you time to pay the money back when the final charging order was made and you failed to adhere to the agreement, they will most likely apply for an order for sale)
if other mortgages or secured loans have to be fulfilled using the proceeds from the sale – if other debts have to be paid off first, your creditor may not obtain any profits by forcing you to sell your property
the level of equity in the property – equity refers to the sum of money you would obtain from the sale of your property after paying off your mortgage (if the equity in your property is low or nonexistent, it may not be worthwhile for your creditor to force you to sell it)
if they think you have failed to repay the debt despite being able to do so
if they believe that forcing you to sell your property is the sole means of recuperating their money.
Submitting Your Evidence to the Court
In the event that your creditor seeks an "order for sale," you will be summoned to attend a court hearing. This hearing is of utmost importance because it provides you with the opportunity to disclose your circumstances.
Upon receiving a copy of the claim form, which has been completed by the creditor, and an "acknowledgment of service" form, you must complete and return the latter form, along with any supporting documentation, within 14 days. It is important that you also send a copy of the form and documentation to your creditor. Should you require additional time to gather evidence, you may request an extension of up to 14 days by submitting a written request to your creditor.
Should you fail to return the "acknowledgment of service" form in a timely manner, you will be ineligible to partake in the court hearing. In such an event, if you desire additional time to submit the form and necessary documentation, you must complete the N244 form and provide a payment of £275.
If you are unable to afford court fees, there are resources available to assist you; check the government website for eligibility requirements.
Following the submission of your evidence, your creditor will have 14 days to respond with additional evidence supporting their position. They may request up to an additional 28 days, to which you may object if deemed necessary.
If you are uncertain as to whether you should grant your creditor more time, seek guidance from a solicitor or other legal representative. Additionally, it is advisable to seek specialist advice prior to attending court, as the legalities surrounding this issue can be quite intricate.
The court may order a property sale if the debt is solely in your name, if you are jointly liable with another party and the property is in both of your names, or if you own the property jointly but the debt is exclusively in your name. If the debt is solely in your name but the property is jointly owned, it may be more difficult for your creditor to obtain an order for sale. In such cases, all joint owners should attend the court hearing to explain their situation, including a spouse who is not a joint owner but lives in the property and may have a beneficial interest in its value.
The court will consider the interests of the entire family and may determine that forcing someone who was not responsible for the debt to vacate the property is inequitable. Moreover, the court may decide that the interests of the family supersede those of the creditor. Factors influencing such a decision may include whether there is sufficient equity in the property to satisfy the mortgage and charging order debt, as well as the potential adverse effects on the family if they are forced to sell the property.
When faced with the possibility of a charging order on your property due to debt, it is important to consider your personal circumstances and those of the people you live with. This could include the reasons why you purchased your property, any children's well-being, and the presence of any disabled or elderly individuals. Furthermore, you should explore alternative payment options, such as an installment order, administration order, or attachment of earnings order before going to court.
If you do end up in court, you can still make an offer of payment and provide a full financial statement to the court. You can also ask for a postponement or suspension of the order, which will delay the sale until a later date. Additionally, using a budgeting calculator can help you create a financial statement to give to your creditors.
In the event that an order for sale is made, you will usually have 28 days to pay off your debt or vacate the property. Failure to do so could result in a warrant of possession. If you have joint ownership of the property, the court can make a charging order for the entire property if the debt is in both names, but only on your share if the debt is solely in your name. Moreover, the court must take into account the interests and well-being of all those who live in the property, including any who claim a beneficial interest. It is important to communicate the implications of a charging order or order for sale to those you live with, especially if they are joint owners or have a vested interest in the property. They may want to attend court to explain their situation and argue for why the sale should be postponed or cancelled.
If you pay off the debt, you can apply for the order to be discharged and removed from the Register of Judgments, Orders and Fines. This can help with your credit rating. If you are struggling with bills or budgeting, seek out resources to help you manage your finances and expenses. Remember to stay informed and communicate with all involved parties throughout the process.
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