What is a charging order?
- In certain circumstances, a creditor that has a county-court judgment against you, ordering you to repay a debt, can apply to the court for a charging order to enforce the judgment.
- A charging order gives the creditor security for the debt so that it becomes ‘secured’, like a mortgage on your house. See the later section What does a charging order affect?. A charging order could be made against other land or other assets that you own.
- There must be a hearing in the county court before a charging order can be made. There are several arguments you can use to try to stop this from happening.
- This fact sheet explains the court procedure in the county court and what you can do about it. Some creditors can apply for a charging order after taking action against you in the High Court. If you think this may have happened, or if you are not sure what to do, contact us for advice.
The information in this section is based on our current understanding of changes to the law from 1 October 2012. It is not yet clear how courts will apply the new law in practice. If your creditor or the court does not follow the rules we describe, contact us for advice.
My creditor applied for my county-court judgment before 1 October 2012
paying the debt by instalments
If you have been ordered to pay the debt by instalments and are not behind on the payments, the court should not make a charging order. This is because of a very important case called Mercantile Credit Co Ltd v Ellis in 1987. See the later section on I already have an instalment order and I am not behind with it for more information.
In this situation, the creditor can apply for a charging order if they have a county-court judgment against you and:
- you have been ordered to pay the whole debt immediately, or by a certain date, (this is known as a ‘forthwith’ judgment) and you have not done so; or
- the court has ordered you to pay the judgment by instalments and you have missed one or more payments.
If you have been ordered to pay a county-court judgment by instalments that you cannot afford, you may be able to ask the court to look at their decision about the rate of payment again. Contact us for advice.
My creditor applied for my county-court judgment on or after 1 October 2012
In this situation, changes to the law mean that the creditor can apply for a charging order even if the court ordered you to pay the county-court judgment by instalments and you are up to date with them.