If a debtor refuses to pay despite a County Court Judgment (CCJ), and they own property, a Charging Order is an effective way to secure your debt. This ensures that when the property is sold, you receive payment before the debtor gets any proceeds. In some cases, you can also apply for an Order for Sale, forcing the debtor to sell their property to repay the debt.
At Talbots Law, we help creditors secure debts against property and take further action when necessary. In this article, we explain how Charging Orders and Orders for Sale work.
What is a Charging Order?
A Charging Order places a legal charge on a debtor’s property, similar to a mortgage. This means that when the property is sold, your debt must be repaid from the proceeds. If the charge is sought against a property, a Land Registry search must be obtained to confirm the debtor has an interest.
It is particularly useful when a debtor refuses to pay but owns valuable property.
How to Apply for a Charging Order
Step 1 – Interim Charging Order
- You apply using Form N379 and pay a court fee.
- The Court will issue an Interim Charging Order.
- Once this has been obtained, the charge should be registered at the Land Registry to show that the claimant has an interest. The type of Land Registry registration, and therefore security offered, is dependent on the party or parties shown on the Proprietorship Register and name on the Judgment.
- The charge can be secured by way of a Unilateral Notice, which is the greater form of security if the Judgment Debtor and named Proprietor are the same.
- If there is more than one Proprietor and only one Judgment Debtor, then the Charge can be registered by way of a Restriction, which will only provide the Creditor with a notice if there are any dealings with the property charged.
- The Interim Order must be served on all parties with a beneficial interest.
- The Court will provide a date to consider whether a Final Charging Order should be granted.
Step 2 – Final Charging Order
- The Court will schedule a hearing, where the debtor can object.
- If successful, the Court grants a Final Charging Order, making the charge permanent.
- The Final Charging Order will remain in place until the property is sold, payment is received, or a Notice to Cancel the Restriction is received. If the property is repossessed, then repayment of any Charge would be unlikely, unless there is sufficient equity remaining in the property.
What Happens Next?
Once a Charging Order is in place, you have two options:
- Wait for the property to be sold – payment may be made from any proceeds of sale after prior charges are discharged.
- Apply for an Order for Sale – if the debt is substantial, you can ask the Court to force a sale.
Order for Sale: Forcing the Debtor to Sell
If the debtor continues to refuse payment, an Order for Sale allows you to force the sale of the property.
- This is only granted in serious cases, usually where the debt is substantial.
- A property valuation would also be required prior to making the application to ensure there is enough equity.
- The Court will consider the debtor’s circumstances before making a decision.
Supporting your Debt Recovery Challenges
Recovering unpaid debts can be a frustrating and time-consuming process, particularly if you are unfamiliar with the legal procedures involved. As experienced civil litigation lawyers, we have put together a clear, step-by-step guide to help individuals and businesses understand the debt recovery process in England and Wales.
Our series of comprehensive articles will walk you through each stage, from initial communication with the debtor to enforcement of a court judgment.
For further information and guidance, read the full series:
- Step 1 – Contacting the Debtor
- Step 2 – Sending a Letter Before Action (LBA)
- Step 3 – Issuing a County Court Claim
- Step 4 – Default Judgment & The Debtor’s Response
- Step 5 – Enforcing a County Court Judgment
- Step 6 – Warrant of Control: Sending Bailiffs to Recover a Debt
- Step 7 – Writ of Control and HCEOs
- Step 9 – Attachment of Earnings Order
- Step 10 – Third-Party Debt Orders
- Step 11 – Preventing Debt Issues
Expert Legal Advice
We have extensive experience in obtaining Charging Orders and Orders for Sale, ensuring debts are secured and recovered efficiently. Contact us today to discuss your case.
Our debt recovery product, Talbots Collect, is a fixed-fee debt recovery product specifically focussed on business-to-business debts that is fast, simple, and delivered at a competitive price. If you would like to speak with one of our debt recovery experts, please complete the form below.
Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional. The contents of this blog refers to the process in England and Wales.
This blog was written by Tessa Rhodes, Associate & Debt Recovery Manager, in our Dispute Resolution Team.