Charging Order to enforce a judgment - the pros and cons

Solicitors to advise on charging orders

A charging order is a legal mechanism that converts a civil judgment debt into a charge against the debtor's property. Here's a clear explanation:

A charging order attaches a judgment debt to a debtor's property (typically their home) or other assets like shares, essentially creating security similar to a mortgage. This prevents the debtor from selling or remortgaging the property without addressing the debt, though it doesn't force an immediate sale.

We advise and represent clients applying for a charging order and possibly thereafter applying for an Order for sale. We also advise and represent judgment debtors who are facing applications relating to charging orders.

When to apply for a charging order

Charging orders are typically sought when:

• You have obtained a County Court or High Court judgment (CCJ)

• The debtor owns property or assets but isn't paying the judgment debt

• Other enforcement methods have failed or appear unlikely to succeed

• The debt amount justifies the cost and time of obtaining the order

• Long-term security is preferred over immediate payment

Key considerations

The main advantage is securing the debt against an asset, though the main disadvantage is that payment may be delayed until the property is sold or remortgaged.

With a charging order in place, your claim will take priority over unsecured creditors if the property is sold. This can increase the likelihood of recovering the debt. The debt continues to accrue interest while the charging order is in effect, which can help compensate the creditor for the time it takes to recover the debt. A charging order can be combined with an application for an immediate order for sale in appropriate cases.

Risks and disadvantages include :-

• The property must have sufficient equity after accounting for existing charges.

• Other creditors may have prior claims (especially mortgages).

• Cost-benefit analysis needed as process involves court fees and legal costs.

• May need to wait for property sale to recover the debt.

Process for obtaining a charging order

To request a charging order, you must complete Form N379 and apply at court for an interim charging order. You will need to include details of  :-

1. the property you are seeking the order over including ownership.

2. other creditors you are aware of and anyone else with an interest in the property.

3. any additional information relevant for the court.

Once the court receives your application,  if all is in order an interim charging order is made and you will need to register this at the Land Registry. There will then be another hearing to decide whether a final charging order will be made. The order must be registered at Land Registry to be effective