If your Creditor has taken you to Court they may have obtained a county court judgement against you. This is where the Court have ordered you to pay a sum of money to the Creditor. This entails you making arrangements to repay the debt as a lump sum or by way of instalments.
A Creditor can obtain a further Court order called a Charging Order. This order secures the debt against your home or any other property that you own. Once the Charging Order has been obtained, a Creditor can apply to the Court for permission to sell your home/property to determine the money owed to them.
To apply for a Charging Order there are two stages. These are an interim order and a final order. An interim order is granted by the court without you knowing an application has been made. This allows your Creditor the opportunity to register the Charging Order with the Land Registry to prevent you from selling the property in question without your Creditor being notified. The interim order must be served not only on you but any joint owners of the property along with any Creditors who have registered a mortgage and/or any other security with the Land Registry.
Before making an interim order final, the Court must be satisfied that all relevant parties have been served with the interim order correctly. If the Court receives no written objections to the interim order within the time allowed, it will make a final order and once again your Creditor will register this with the Land Registry to secure their position.
If you object to the interim order being made final, the Court will list the matter for a hearing allowing all parties to attend before a District Judge in order that evidence can be heard from all parties where the Court will decide whether a final order should be made.
When considering if the interim order should be made final, the court must consider all of the circumstances of the case and your personal situation before making a decision. You should make the Court aware of how much equity there is in your property. This is the amount of profit you would make if the property was sold and any debts registered against it were paid off. If there is little or no equity, your Creditor would not benefit from a final charging order and the court may decide to refuse the application.
It may also be the case that other creditors are allowing you to repay the debt by way of instalments over a period of time rather than asking the court to make a charging order. You may be able to argue that it is not necessary to grant such an order if other Creditors do not think it is necessary, especially if others are owed more money.
You may also be able to argue that there are other ways in which the debt can be repaid, such as an instalment order, attachment of earnings order to name a few.
If a final order is made your Creditor can either wait until you sell the property or apply to the Court for an Order for Sale to determine the money owed to them.
There is a possibility that you can ask the Court to put conditions on the final charging order such as that the Creditor can not apply for an Order for Sale within a certain time frame or subsequently you may be able to ask the court to amend the conditions if appropriate.
If the debt in question is repaid to the Creditor in satisfaction of the final charging order, any restrictions or unilateral notices registered at the Land Registry should be removed immediately by your Creditor making the appropriate application to them. They should then provide you with evidence that all notices have been removed from the Land Registry records.
In the event that you receive an interim charging order from the court, you should take this very seriously and obtain legal advice as to the consequences of the order. If you ignore the order, the Court will make a final charging order and you are then at risk of loosing your home/property.
We can assist in considering what steps you can take to resist such an application and/or assist in trying to resolve matters with your Creditor.
Summerfield Browne have offices in Leicester, Birmingham, London, Oxford, Cambridge and Market Harborough.
