You are not the only one in the UK who is wondering whether a property has already received a charging order before buying it. This article is specifically designed to demystify how to check debt against a property and alleviate your concerns. Don’t worry. We are here to help you in finding an answer to that burning question.

Additionally, we will discuss all other legal ways of removing a Charging Order from the land registry regarding your own property.

So, let us hope right into the article to find out more…

Table of Contents

1. What is a charging order?
2. How to Check Debt Against a Property?
3. When Can a Debt Be Secured Against My Property?
4. Will I Lose My Home If I Get a Charging Order?
5. How Long Does a Charging Order Last in the UK?
6. Will a Charging Order Affect My Credit Rating?
7. Can a Jointly Owned Property Have a Charging Order?
8. Can an IVA Stop a Charging Order?
9. What should I do if I cannot afford to settle the defaulted debts with your creditor, who might wish to take a charging order against you?
10. Seeking Free Financial Advice?
11. Key points
12. FAQs

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What is a charging order?

A Charging Order is a court order that allows a creditor (in the UK) to secure a debt against a debtor’s property (typically their home). It simply means that the creditor can take legal measures to sell the debtor’s property in order to recover the money owed by the debtor.

Charging orders are a type of ‘secured debt’. It means that the creditor has a legal right to the debtor’s property that binds with the credit agreement.

Simply, it means that they can take over the debtor’s property if the debt is not repaid. This gives the creditor greater protection than an ‘unsecured debt’.

(Unsecured debts are a debt type that is not linked to any specific asset).

A creditor must first obtain a County Court Judgment (CCJ) against the debtor from the court in order to obtain a charging order next.

It simply means that the court has made the debtor legally responsible for the accused debt by their creditor. Only then the creditor can apply for a Charging Order from the court, that is to be placed on the debtor’s property.

The Charging order will be registered with the Land Registry if the court grants it. This means that the charging order will become a public record and will be visible to anyone who searches the property’s title deeds.

Keep in mind that the creditor cannot initiate the procedures to sell the accused debtor’s property by default just because he got a charging order against him.

However, it will give the creditor the right to apply to the court for an order for sale. Then, the debtor’s property will be sold if the court grants the permission to sell. Then, the proceeds will be used to pay off the due debts.

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How to Check Debt Against a Property?

You need to check in a few different places in order to check debt against a property. Here are the ways you can check for debt against a property in the UK:

The Land Registry is the official register of land ownership and charges in England and Wales. You can search the Land Registry online or by post for a fee. The search will reveal any charges registered against the property, such as mortgages, secured loans, and charging orders.

Here’s how to search the Land Registry online:

Here’s how to search the Land Registry by post:

To conduct a Land Registry charging order inquiry, you can access the official website or utilise the provided contact information:

Phone: 0300 006 0411 (English) or 0300 006 0422 (Welsh)
Email: customersupport@landregistry.gov.uk

The register of judgements is a public record of county court judgements (CCJs) and other financial orders. A CCJ is a court order that requires you to repay a debt. If a CCJ has been registered against you, it may be linked to a charging order on your property.

Here’s how to search the register of judgements:

The local council may be able to tell you if there are any outstanding debts associated with the property (such as council tax or water bills).

Here’s how to contact the local council:

A solicitor can help you search for debts against a property and can also advise you on your legal options. But it is somewhat expensive compared to other options. However, it may be necessary if you are unsure about the state of the property’s finances.

Here are some additional tips that might be valued knowing before checking for debt against a property:

It is important to have a solicitor carry out a search for debts before you exchange contracts if you are buying a property.
You should disclose any debts that are registered against the property to potential buyers if you are selling a property.

Additionally, it is important to note that this is not an exhaustive list. And there may be other ways to check for debt against a property. You should always seek professional advice if you are unsure about the legal status of a property.

When Can a Debt Be Secured Against My Property?

You need to be aware of when a creditor can check debt against a property and secure it through a charging order. It’s pivotal to know, especially if you’re already dealing with a County Court Judgment (CCJ).

Let’s dive into this crucial topic.

Firstly, a creditor can only check debt against a property for a charging order if they have already taken a CCJ against you. Simply, it means they cannot take a charging order on your property if they have not yet applied and taken a CCJ against you.

But here’s where it gets interesting:

The creditor’s hands are tied if your CCJ dates back to before October 1 2012. They can only seek a charging order if:

You didn’t pay the full debt by the court’s deadline.
You failed to stick to a repayment plan, which you had agreed upon before.

You might need to prove this in court. Missed any payments? Catch up before your court date to dodge the charging order.

Things changed If your charging order was taken before October 1 2012. Now, your creditor can apply for a charging order immediately, regardless of your repayment status. It means they can take a Charging order against your property even if you stick to the repayment plan that you agreed upon when receiving a CCJ.

The date on which the creditor applied for the CCJ.
Date of CCJ: Always check the date. It decides the rules that apply to you.
Repayment Plan: Know the details of your CCJ repayment plan.

Stay tuned to uncover more if you are curious about what this means for your property and how these changes will impact your property security. Keep reading, as the answer may surprise you!

Will I Lose My Home If I Get a Charging Order?

Just because you receive a charging order doesn’t mean you may lose your home every time. But this doesn’t mean you should not be aware of these possibilities as well. It is because things could escalate to a situation that you might not be able to solve easily if you are not aware of them.

Below are some of the facts that could affect your creditor’s decision on whether you will lose your home or not.

1. Whether you have a final charging order:

Interim charging order: This restricts you from selling the property without the creditor’s permission. It doesn’t guarantee they’ll force a sale.
Final charging order: This gives the creditor the right to apply to the court for an order for sale.

2. Whether the creditor applies for an order for sale:

The creditor may choose to wait until the debt is due or until they believe the property’s value has increased.
They may also be willing to negotiate a repayment plan or allow you to sell the property yourself.

3. Your ability to repay the debt:

The creditor may be less likely to force a sale if you can make regular payments towards the debt.
You may be able to explore other debt management options like an Individual Voluntary Arrangement (IVA) or bankruptcy. Keep reading as we have addressed these options in a separate section.

4. The value of your property:

Your creditor may be more likely to force a sale if the value of your property is significantly higher than the debt owed.
You may be able to negotiate with the creditor to release some of the equity in your property.

5. Whether you have joint owners:

If you own the property jointly with someone else, their share will not be affected by the charging order unless they are also liable for the debt.
Your joint owner may be able to buy out your share of the property or agree to a sale to avoid losing their home.

In short, while a charging order increases the risk of losing your home, it is not a guarantee. Thus, it’s crucial to seek professional legal advice to understand your options and explore ways to avoid losing your property.

Firstly, don’t get panicked just because you received a charging order. A charging order doesn’t automatically mean you’ll lose your home, as we mentioned before. However, it does tie your property to your debt.

So, guess where the money goes first if you decide to sell or remortgage?

Right into settling the debt that was bound to the charging order.

But there’s more:

Order of Sale: Creditors might push for this in court. Simply, it can force the sale of your property. And the proceeds will go towards clearing your debt.
Court Involvement: Your presence in court is crucial if an order of sale is pursued.
Here’s a lifeline: seek advice from debt advisors. They might help you dodge the order of sale.

Debt and Court Costs: Creditors can’t force a sale if these total less than £1000 or if your debt falls under the Consumer Credit Act.
Act Fast: Contact a debt advisor immediately if you are unsure of your next step. It is because understanding these orders and their implications is crucial to finding a fruitful solution to your debt issue.

How Long Does a Charging Order Last in the UK?

In the UK, a charging order lasts until the debt is settled in full. There is no time limit for how long it can remain legally enforceable. However, the way it affects the property and the options available to the debtor changes over time:

It is a temporary order that lasts 28 days unless made final by the court. It can restrict the debtor from selling or disposing of the property without the creditor’s permission. The creditor cannot force a sale during this time.

It is a permanent order that remains in place until the debt is fully repaid. The creditor can apply to the court for an order to sell the property at any time.

In the meantime, the debtor is allowed to negotiate with the creditor to delay the sale or agree to a repayment plan. The debtor can apply to the court to have the charging order set aside or varied.

The creditor must apply to the court for an order to discharge the charging order once the debt is repaid in full.

Once discharged, the charging order will be removed from the Land Registry and will no longer have any effect on the property.

Even after the discharge order is granted, the charging order may still appear on the Land Registry for a period of time. This is because the Land Registry takes some time to update its records. You can apply to the Land Registry to have the charging order removed once the discharge order is granted.

There are instances where the court may order to discharge the charging order after a certain period of time, even if the debt is not fully repaid. This action is usually taken in exceptional circumstances where the debtor is bankrupt or the property is worth significantly less than the debt owed.

Prevention is Key: It’s better to take measures to avoid getting charging orders altogether. The simplest thing you could do is to strive to settle debts before they could escalate to this extent.
Registration Errors: Your debt remains unsecured if a charging order isn’t registered correctly. This could lead to the debt becoming statute barred under the Limitation Act 1980.

It is important to note that these facts are general guidelines. The specific debt situation you are already facing and the cause of action to find a solution can be vary depending on the circumstances of the case. Thus, seeking legal advice is crucial to understand your rights and options regarding a charging order.

Will a Charging Order Affect My Credit Rating?

Directly Not. Receiving a charging order in the UK will not directly affect your credit rating. However, it can indirectly impact your credit score in few ways, as shown below:

The debt that led to the charging order may already be reflected in your credit report, negatively impacting your score.

Additionally, County Court Judgments (CCJs) and other defaults can stay on your credit report for up to six years. You can remove a CCJ from your credit history if you can settle the total debt before passing 30 days of receiving the court order.

On the other hand, your credit file updates the CCJ status to ‘satisfied’ if you manage to settle the debt after passing 30 days of receiving the court order.

Having a charging order on your property can make it harder to obtain certain types of credit, like mortgages or loans. Lenders may see it as a sign of financial difficulty and be less likely to approve your application.

Creditors’ attempts to collect the debt related to the charging order may show up on your credit report. This can include missed payments, late fees, and legal action.

If the property is eventually sold to satisfy the debt, the sale itself may be recorded on your credit report. This can impact your credit score for a short period.

As you can see, a charging order itself won’t directly hurt your credit score. But, It can be a symptom of underlying financial issues that can negatively affect your creditworthiness.

Here are some steps that you can take to minimise the impact of receiving a charging order on your credit:

Repay the debt: This will remove the charging order and any associated negative marks on your credit report.
Negotiate with the creditor: You may be able to work out a payment plan or other arrangement to avoid a sale.
Seek debt advice: Organisations like Citizens Advice and StepChange can offer help and support to manage your debts.
Research for other debt solutions that could help you in solving your debt issue. Keep reading. We have included a separate section explaining all those options.
Monitor your credit report: Regularly check your credit report for any inaccuracies and dispute any errors you find.
Build positive credit: Focus on making timely payments on other credit accounts and building a positive credit history.

By taking proactive steps to address your financial situation and manage your credit, you can mitigate the potential impact of a charging order on your credit rating.

Can a Jointly Owned Property Have a Charging Order?

Yes, a charging order can be placed on a jointly owned property, but only against the debtor’s share of the property. This is known as their beneficial interest.

Suppose you own a property jointly with someone else, and you owe a debt of £10,000. Then, your creditor can only obtain a charging order against your 50% share of the property, not your co-owner’s share.

What are the implications of a charging order on a jointly owned property?

Restrictions on selling the property: The debtor with the charging order against their share cannot sell the property without the creditor’s permission.
Right to apply for a sale: The creditor can apply to the court for an order for the sale of the property to recover the debt.
Impact on co-owner: The charging order will not affect your co-owner’s share of the property unless they are also liable for the debt.

Additional factors to consider:

Type of debt: Charging orders can only be placed on certain types of debts, such as secured loans, mortgages, and County Court Judgements (CCJs).
Joint and several liabilities: On the other hand, the creditor can pursue the full amount of the debt from either of the debtors regardless of their ownership share if the debt was incurred jointly and severally.
Legal advice: It is important to seek legal advice to understand your rights and options if you are facing a charging order on a jointly owned property.

Can an IVA Stop a Charging Order?

Yes and NO, it is because an Individual Voluntary Arrangement (IVA) can stop a charging order in the UK, but it depends on the timing and circumstances. Here’s a breakdown:

Protection from legal action: Once an IVA is approved, it provides a ‘breathing space’ where creditors, including those with charging orders, cannot take further legal action against you and your property. This includes applying for an order for the sale of the property.
Automatic suspension of existing charging orders: Any existing charging orders against the debtor’s property are automatically suspended when the IVA is approved. This means that the creditor cannot enforce the charging order or sell the property until the IVA ends.
Potential for removal of charging orders: In some cases, the IVA may be able to negotiate with the creditor to remove the charging order altogether. This could be achieved if the debt is included in the IVA and the creditor agrees to accept a reduced payment.

Timing is crucial: an IVA cannot stop the property sale if a charging order is already in place and an order for sale has been granted before the IVA is approved.
Not all debts are included in an IVA: Certain debts (such as student loans and some tax debts) cannot be included in an IVA. You cannot take aid from an IVA if the debt that led to the charging order falls into this category.
Rejection of the IVA: The charging order will become active again if the IVA is rejected or fails. Then, your creditor can resume enforcement action.

Therefore, while an IVA can be a powerful tool to stop a charging order, it is not always guaranteed to succeed. Seeking legal advice is crucial to understand your specific situation and determine the best course of action.

What should I do if I cannot afford to settle the defaulted debts with your creditor, who might wish to take a charging order against you?

Sometimes, you may face difficulties in agreeing to the proposed payment plans from your creditor, especially if they are financially burdensome.

In such situations, it is advisable to explore alternative debt solutions that can effectively address your debt-related concerns. In the UK, there are various alternative debt solutions to consider.

However, it’s crucial to keep in mind that each of these debt solutions has specific eligibility criteria. Selecting the right one can lead to debt resolution, while choosing the wrong one could worsen your financial circumstances.

Hence, seeking guidance from a professional debt advisor is a prudent step to take if you find it challenging to determine the most suitable debt solution on your own.

If you need personalised assistance based on your current financial situation, please feel free to complete our online form by clicking here to receive help from our Money Advisor Team.

Seeking Free Financial Advice?

There are a number of debt charity organisations that you could use to get professional debt and financial advice free of charge. Their advisors will inquire deeply about your debt issue and help you find a reliable solution to it.

Below is a list of charity debt organisations where you could get free debt help:

Key points

A Charging Order is a legal tool allowing creditors to secure a debt against a debtor’s property, providing them with greater protection than unsecured debts.
To obtain a Charging Order, creditors must first secure a County Court Judgment (CCJ) against the debtor, granting the right to apply for an order for sale.
Methods to Check Debt Against a Property include utilising the Land Registry, exploring the register of judgments, contacting the local council, or hiring a solicitor for a comprehensive search.
The Possibility of Losing a Home depends on factors like the type of charging order and creditor actions, with joint owners having potential options to prevent a sale.
The Impact of a Charging Order: It ties property to debt, affecting sale or remortgage proceedings. Seeking advice from debt advisors can guide you in avoiding an order of sale.
Duration of a Charging Order: Interim charging orders last 28 days unless made final by the court. Final charging orders remain until the debt is repaid, with negotiation possibilities.
Credit Rating Impact: While a charging order won’t directly impact credit ratings, underlying debt and difficulties in obtaining credit can indirectly affect creditworthiness.
Jointly Owned Property and Charging Order: A charging order can be placed on a debtor’s share of a jointly owned property, with implications for selling and the right to apply for a sale.
IVA and Charging Order: An Individual Voluntary Arrangement (IVA) can provide a legal ‘breathing space’ against actions, including charging orders, but success depends on timing and circumstances.

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