Are you feeling anxious about what happens to a charging order when someone dies? It’s a daunting thought, dealing with debts, more so when it intertwines with the complexities of County Court Judgments.
But here’s a thought to ponder: in the intricate world of debts and legal orders, what unexpected turns await when death enters the equation?
Let’s delve deeper and uncover the truth ahead.
Table of Contents
MORE
LESS
What is a Charging Order?
A charging order is a way a creditor can secure a debt against your property. This is important because it affects what happens when that property is sold. If sold, the money from the sale goes first to pay off the debt.
This happens only if a creditor has a County Court judgment (CCJ) against you. A CCJ means the court has told you to repay what you owe. So, you face two choices:
- Make regular payments to the creditor.
- Pay the whole debt by a set date.
Will I be Forced to Sell My House to Pay Off the Charging Order?
Yes, after a creditor applies for a charging order against your property, you can lose your property if you don’t pay off the debt.
If you fail to make payments, the creditor can go to court and apply for another court order to get you to sell your house and recover the money owed. This method is known as an ‘order for sale’. If you face a situation like this, we recommend you reach out to a debt charity and get some advice.
What Does a Charging Order on Your Property Mean?
A charging order on a property implies that there’s a legal claim against it to ensure debt repayment. It’s a significant concern for anyone managing an estate or inheritance.
So, if you fail to pay the debt, your home will be sold, and the money will be used to pay off the debt.
Is a Charging Order a Legal Charge?
Yes. A charging order isn’t just a casual agreement. It’s legally binding. This means it’s officially registered with the Land Registry. It turns unsecured debt into secured debt, anchored to your property.
Charging order records are not visible on your credit file. This makes it tricky, as you can’t just check your online credit record for free. So, what happens to a charging order when someone dies and it’s not listed on their credit file? How will the heirs or executors know about this legal charge? Stay tuned to find out.
What’s the Time Period Required to Get a Charging Order?
Getting a charging order isn’t an overnight process. It typically takes about 6-8 weeks. The first step is the Interim Charging Order, usually granted automatically, without a court hearing, once the creditor applies.
Can You Sell a Property with a Charging Order on It?
If there’s a charging order on your property, selling it isn’t straightforward. You must inform your creditor about the sale. The creditor, upon applying for an interim charging order, also registers a legal charge at the Land Registry. If you manage to pay off the debt in full when selling, you can then get this charge removed.
So, what happens to a charging order when someone dies? This situation opens a complex web of legal and financial considerations, leading us to the next crucial part of our exploration.
How Do I Remove a Charging Order from My Property?
You can get a charging order removed once you pay the debt. In this situation, the creditor will let the Land Registry know that you have paid off the debt and request them to remove the charging order from your property.
Once you finish paying it, make sure to ask the court to provide you a certificate of satisfaction on your CCJ and include proof of payment.
How Long Does a Charging Order Last on a Property?
A charging order can stay on a property until the associated debt is fully settled. Once paid, an application to the Land Registry can remove it. But, this process gets complicated when the debtor dies.
Laws, like the 12-year expiry, only apply in Scotland.
Can I Remortgage with a Charging Order?
Remortgaging a property with a charging order is indeed possible, but it’s a decision mired in financial and legal considerations. The primary aim is usually to settle the outstanding debt.
In the event of the property owner’s death, the executors or heirs need to understand how the charging order affects remortgaging options.
Charging orders, houses in joint names and Deceased Individuals
If you own a house jointly with another person and a creditor applies for a charging order, the other individual will be informed. So, what happens to a charging order when someone dies and it was jointly owned?
Most couples own their property jointly. So, in a case where one individual dies, the property will be passed onto the ownership of the surviving partner. A charging order converts a joint tenancy into a tenancy in common.
So, in a situation where one of them dies, the share of the property belonging to the person who died will form part of their estate. This won’t automatically pass to the other individual.
What can you do once a final charging order is made
If you receive a final charging order from the court, you can:
- Apply to ‘set aside’ the order
- Get the charging order changed
- Ask for conditions to be attached to the charging order
If you receive a final charging order from the court, you have the chance to apply to have it set aside. This indicates that the debt will go back to the judgment stage, and if the creditor wants to take further action, they should reapply. This will buy you more time to repay the money you owe
Note that you have the right to do this only if you believe the court didn’t consider your circumstances properly. Also, make sure to make this application immediately after the charging order is finalised. In order to do this, fill out the N244 court application form.
Keep in mind that it is very difficult to set aside the charging order. If you want help regarding this, feel free to reach out to a debt charity.
You might be able to request the court to stop your creditor from forcing you to sell your property right away. This is known as ‘attaching conditions’. For example, you can for:
- Your property is not to be sold while your kids are still at school
- The final order is to be suspended, and you will keep to an agreed repayment plan
If there are conditions attached to the charging order, it’s possible to request the court to change them if the financial situation changes.
For example, if the charging order states to pay back the creditor in instalments, request the court to change the instalment amounts. It’s also possible to ask them to change the date of the final instalment. For additional advice on how you can do this, feel free to reach out to a debt charity.
What Options Do I Have If I’m Unable to Pay the Debt?
If you’re unable to pay the debt, the best option is to communicate with the creditor and request a payment plan. If not, taking up a debt solution is also an option. There are many debt solutions available in the UK for people struggling with debt.
But note that it is crucial to make this decision only after carefully considering its suitability. This is because while the right debt solution will help you to write off debt, the wrong one might worsen your situation.
Thus, we recommend that you get some advice from a debt charity before you decide. Alternatively, feel free to fill out our online form, and our MoneyAdvisor team will guide you.
Some debt solutions available in the UK include:
After all, if you choose to take up one of the above options, you won’t have to worry about questions like “What happens to a charging order when someone dies?”.
Additional Advice and Guidance
If you’re struggling with debt, contact a debt charity. There are many debt charities in the UK that offer advice. Reach out, and they will guide you. A few debt charities available in the UK include:
- StepChange
- National Debtline
- Citizens Advice
Key Points
- A charging order is a legal tool that secures a debt against a property. If the property is sold, the debt is paid from the proceeds. This becomes crucial when considering what happens to a charging order when someone dies.
- Knowing if there is a charging order on a property is essential, especially after the demise of the property owner. This involves checking with the Land Registry, as charging orders don’t appear on credit files.
- The charging order may impact the inheritance process and the responsibilities of the estate or heirs.
- The process for removing a charging order from a property involves paying off the debt and informing the Land Registry. Understanding this process is vital, especially in handling the estate of a deceased debtor.
- One crucial aspect to address is who bears the responsibility of the debt after the debtor’s death. This includes understanding the legal processes involved in transferring or selling the property under a charging order.
- Administrating an estate with a property under a charging order requires careful legal and financial consideration, particularly in understanding what happens to a charging order when someone dies and how it affects the distribution of the estate.
