Once a creditor secures a County Court Judgment (CCJ) against you, that party can enforce the debt by applying for a Charging Order. If you agreed to repay the debt in installments and are not currently in arrears, a creditor may not request a Charging Order. However, this section of the law may soon be changing so creditors will be able to get this order even if payments are not in arrears.
After the Charging Order is granted, a note is entered on the Land Registry listing for the property. This flags a restriction for the ability to remortgage or sell the property. The creditor awaits the release of equity that will occur when the property is remortgaged or sold and uses this to recoup the money it is owed. The second stage in the process occurs when the creditor obtains a Final Charging order. A district judge determines whether the interim order will be discharged or made final.
In determining whether to issue a Final Charging Order, the judge is supposed to consider the personal circumstances of the individual and whether a creditor would tend to be “unduly prejudiced” by the creation of the order. The affected individual can object to the issuance of the final order by applying to have the hearing transferred to a local court.
The individual must file at court and no less than seven days prior to the hearing, provide written documentation and supporting evidence to the creditor regarding the grounds of the objection.
If the affected individual does choose to defend the Charging Order, he or she could should can take several approaches, based on the circumstances. If money is owed to other creditors, they must have been informed of the Charging Order. It is possible that this order could unduly prejudice their rights, rendering it unable to be finalized.
If the court did not direct that other creditors receive notification of a charging order application, an argument can be made that the individual has not be provided a fair hearing. However, if creditors have been notified and none objected, this line of defense may not be sufficient. If the debt is small compared to the amount of equity held in the property, this may form the basis of another line of defense.
The legal owner of the property is responsible for ensuring that the council tax is paid, even if a tenant has been designated responsible for the payment. If the property owner has insufficient equity in the property to cover the debt, he or she may be deemed technically insolvent. In this situation, the issuance of a Charging Order in favor of a single creditor prejudices any other creditors.
Legal support is recommended if the decision is made to dispute a final charging order. The local Citizens Advice Bureau or a private debt management firm can provide advice and may be able to recommend a legal professional. Time is of the essence in this situation so make haste to contact an expert who can provide free debt advice.