Securing Debt with a Charging Order Against a Debtor’s Property

How to Recover Money Owed by Securing a Charging Order on a Debtor’s Home

When someone owes you money and refuses to repay, especially when they own valuable assets such as a home, it can be extremely frustrating. In England and Wales, one effective legal remedy for creditors is to apply for a charging order – a method of securing the debt against the debtor’s property.

This guide explains what a charging order is, how it works, when it’s appropriate, and why it could be a useful enforcement option if you’re owed money.

What Is a Charging Order?

A charging order is a court order that allows a creditor to place a legal charge on a debtor’s property (usually their home). This means that when the property is sold, the debt could be repaid from the sale proceeds – similar to how a mortgage works.

Importantly, a charging order does not force the debtor to sell their property immediately, but it does secure the debt against their ownership interest, increasing the likelihood of future recovery.

How Does a Charging Order Work?

 To obtain a charging order, the creditor must first get a County Court Judgment (CCJ) or High Court Judgment (HCJ) confirming the debt. If the debtor fails to pay, the creditor can then apply for a charging order.

The typical process includes:

1. Obtain a County Court Judgment (CCJ): The first step is securing a court judgment confirming that the debt is owed.
2. Apply for an Interim Charging Order: If payment has not been made, the creditor can apply for an interim charging order, which temporarily secures the debt against the debtor’s property.
3. Attend a Court Hearing (if necessary): The court may schedule a hearing, especially if the debtor contests the order.
4. Final Charging Order: If the court is satisfied, a final charging order is issued.
5. Register the Order with the Land Registry: Once registered, it becomes a legal charge against the property.

When Is a Charging Order Appropriate?

 A charging order may be the right option in situations where:

• The debtor owns property with equity but is refusing to pay or cannot pay immediately.
• Other enforcement methods such as bailiff action or attachment of earnings have failed.
• You want to ensure the debt is secured long-term until the debtor eventually sells or remortgages the property.

It’s important to consider whether the value of the property is sufficient to cover the debt, especially if there are other secured debts (like a mortgage) already in place.

Pros and Cons of Charging Orders

 Advantages:

• Secures your debt against valuable assets such as a home.
• Improves the chances of recovery when the property is sold.
• May encourage the debtor to negotiate or settle.

Considerations:

• Does not guarantee immediate repayment.
• If the property has little or no equity, full recovery may not be possible.
• You may still need to apply for an Order for Sale to force a sale in rare cases.

Conclusion: Take Legal Steps to Secure the Money Owed to You

 A charging order is a valuable legal tool for creditors in England and Wales. It doesn’t offer instant repayment, but it provides a way to secure your debt and potentially recover it in the future.

If you are owed money and want to explore whether a charging order is the right step for you, our specialist team can help.

Contact Our Debt Recovery Solicitors Today

 For expert legal advice on charging orders, CCJs, or any aspect of debt recovery, contact:

Liam O’Shea – loshea@astlepaterson.co.uk

Jodie Holmes – jholmes@astlepaterson.co.uk

Call us on 01283 531366 for a confidential discussion about your case.