Charging orders: can a creditor force the sale of your home?

How a charging order works

1. A creditor has a CCJ that you haven’t paid as ordered. Read what is a CCJ?
2. The creditor applies for a charging order on property you own (alone or jointly).
3. An interim charging order is made, usually without a hearing, and registered against your property at the Land Registry.
4. You can object before the final hearing, for example if you’re keeping up payments or the order would be unfair.
5. A final charging order may then be made.

Once there’s a charging order, the creditor will usually be paid from the proceeds when you sell or remortgage. Interest may continue to be added in some cases.

Can they force you to sell?

The creditor would need to make a separate application for an order for sale. Courts look at all the circumstances, including:

• the size of the debt compared with your equity
• whether you’re keeping up payments under the CCJ
• the impact on you and your family, including children
• other people with an interest in the home, such as a joint owner

For debts that arose under a regulated consumer credit agreement, the court can’t make an order for sale if the amount owed is under £1,000. And if you’ve kept up the CCJ instalments, a creditor generally can’t seek an order for sale while you’re up to date.

In practice, orders for sale are uncommon, but you should take any application seriously.

Joint owners

If you own your home with someone who doesn’t owe the debt, the charging order is placed on your share only. A sale would be harder for the creditor to obtain, and the co-owner’s interests are taken into account.

How to respond

• Respond to the CCJ and keep up affordable instalments – this protects you most.
• Object to the interim charging order if you have grounds, and attend the hearing.
• Ask the court to vary CCJ payments if your circumstances change.
• Get advice about your options. An IVA can include the debt and is often used by homeowners who want to protect their home – read IVAs and your home. Bankruptcy carries a much higher risk to your home.

Frequently asked questions

Can a charging order be removed?

It’s removed when the debt is paid. You’ll need to apply to have it taken off the Land Registry record.

Can a credit card company force the sale of my home?

Only after getting a CCJ, a charging order and then an order for sale, and not if the regulated debt is under £1,000. Courts treat a sale as a last resort.

Does a charging order stop me selling my home?

No, but the creditor will be paid from the sale proceeds.

Sources

• GOV.UK, Make a county court claim for money: enforce a judgment
• Charging Orders Act 1979
• The Charging Orders (Orders for Sale: Financial Thresholds) Regulations 2013