Charging Orders: Myths, Benefits, Drawbacks & Challenges

Summary

A charging order is a powerful legal tool used to secure a debt against a debtor's property. Curious to know how the process works? Whether you're a creditor seeking to secure a debt or a debtor facing the prospect of a charging order, in this article we explain how charging orders work, what types of debts they can secure, common myths surrounding them, and what to do if you're facing or considering getting a charging order. The process typically begins when a creditor gets a judgement against a debtor for an unpaid debt. This could be the result of a court judgment or a County Court judgement. Once the creditor has a judgement in their favour, they can apply to the County Court or High Court for a charging order. The court will consider the application and, if satisfied, will issue a charging order against the debtor’s property. Once granted, the charging order is registered with the Land Registry. With the charging order in place, the creditor has several options for enforcing the debt: 1. Choose to wait for the debtor to sell or remortgage the property, at which point the debt secured by the charging order must be paid off from the proceeds before the debtor receives any.

Key information

• •Unsecured loans (personal loans, credit card debt, or overdraft facilities)
• •Any debts for which a judgement has been obtained in court.
• •Business debts including outstanding invoices or loans.
• •Some tax debts owed to HMRC.
• •The creditor didn’t follow the correct legal procedures when applying for the charging order.
• •The court considers equitable factors when deciding whether to grant or set aside a charging order (i.e. if the debtor can demonstrate that enforcing the order would result in disproportionate hardship or unfairness)
• •There are errors in the amount of debt claimed by the creditor or there are material irregularities in the conduct of the proceedings.
• •Provide guidance on the process of getting a charging order, including assessing the eligibility of the debt and the likelihood of success in obtaining the order.
• •Assist in preparing the necessary documentation to support the application for a charging order.
• •Represent creditors in court proceedings.
• •Advise on the enforcement of the charging order, including pursuing further action to recover the debt secured by the order, such as an order for sale.
• •Provide advice to debtors on their rights and options regarding charging orders, including potential challenges or defenses that may be available.

Practical guidance

• •Source: [Charging Orders: Myths, Benefits, Drawbacks & Challenges](https://lawhive.co.uk/knowledge-hub/money-tax-debt/charging-orders-myths-benefits-drawbacks-and-challenges)

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