THE UK INSOLVENCY HELPLINE

CHARGING ORDERS IN THE COUNTY

COURT

F WHAT IS A CHARGING WHEN CAN A CREDITOR APPLY

A ORDER? FOR A CHARGING ORDER?

• If a creditor has a county The creditor can apply for a charging order if they
C court judgment against you
ordering you to repay a debt,
have a county court judgment against you and:

• You have been ordered to pay the whole debt

T they may be able to apply to
the court for a charging order
to enforce the judgment if
immediately or by a certain date, (this is known
as a “forthwith” judgment) and have not done
you do not pay. so.

• A charging order gives the or

S creditor security for the debt;
in other words, the debt • The court has ordered you to pay the judgment
would become “secured” like by instalments and you have missed one or
H a mortgage on your house, or
other land.
more payments.

• If you have an order to pay the debt in

E • There must be a hearing in
the county court before a
E charging order can be made
and there are several
arguments you can use to try
T to stop an order being made.
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 section “I already have an instalment
order” on page 4.

• This factsheet explains the HOW IS AN APPLICATION MADE?

court procedure in the county
court and what you can do.

N Some creditors can apply for

a charging order after taking
The application for a charging order always has
two stages:
you to the High Court. If
O you think this may have
happened, or if you are not
STAGE ONE – THE INTERIM ORDER

sure what to do, phone us The creditor makes an application for a

for advice. charging order and the court will make what is
15 called an interim charging order if it is
satisfied that you own, or have a part share (an
interest), in the property in question. This is
NOT the final order. An interim charging
order is usually made automatically without a

Charging Orders in the County Court

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 hearing and a date for a full hearing is set. A
copy of the interim order will be sent to you.
This should be done at least 21 days before the
hearing date set by the District Judge. The
hearing is for the court to decide whether or not
to make the charging order permanent
('Final'). This hearing is likely to be held in
the District Judge’s private rooms.
The creditor will also register the interim
charging order as a “caution” on your property
with the Land Registry who should inform you
of this in writing. This means you cannot sell
the property before the hearing.
STAGE TWO – THE FINAL CHARGING
ORDER
The second stage is the court hearing in front
of the District Judge. At this hearing the court
will decide whether to make a permanent
charge on the property. This is called a final
charging order. If you object to a charging
order being made final then you should send
the creditor and the court written evidence
stating why you object. You should do this at
least 7 days before the hearing. This could be
in a form of a letter of objection outlining all
the arguments you have for why the charging
order should not be made. This should be sent
by registered post to both the creditor and the
court.
If you do this then your arguments should be
taken into account by the District Judge at the
hearing. You should still go to the hearing and
if you do not send any written evidence then it
is vital that you go.
The court can refuse to make the charging
order so you must serve a notice and go to
the hearing. If you cannot attend on that
date, contact the court for a different
hearing date to be arranged. If you do not
go, the charging order is likely to be made
final by the court at the request of the
creditor.
Charging Orders in the County Court
If the hearing has been arranged in another
court, ask for it to be transferred to your local
court. You can apply on an application form
called an N244 explaining why you can't go to
the hearing, e.g. due to the distance, travel or
childcare costs. There is a fee for doing this.
See the section on fees at the end of the
factsheet. Phone us for advice.
HOW CAN I STOP A CHARGING
ORDER?
The court must consider whether it is reasonable
to make a charging order. Under The Charging
Orders Act 1979 the court has to consider all the
circumstances of the case and in particular:
• The personal circumstances of “the debtor”
• Whether any creditor would be “unduly
prejudiced”. This means the court has to
decide if making a charging order would
disadvantage other creditors.
The arguments you can use against the order
being made will vary depending on your
circumstances, whether you have any other debts,
whether you have equity in your house and own
your home in joint names or on your own. If you
have to go to a hearing phone us for advice.
These are some of the factors that the court may
consider:
• Does any member of your family have a
disability or serious illness?
• If you have a number of debts and making a
charging order in favour of one creditor would
give them unfair priority over other unsecured
creditors. It is particularly useful if you can
show you already have a payment arrangement
in place with your other creditors. This would
be upset by an order being made. Point out if
any of the debts are larger than this debt and if
any other creditors have frozen the interest.
• Your creditor is supposed to list all the other
creditors that they are aware of in the
application for an interim charging order.
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• The court can order the interim order to be sent
to the other known creditors but does not have
to do this. This means that creditors who may
want to object to the final charging order being
made will not know about the hearing. You
can raise this in your written objections and at
the hearing if you think a creditor may be
“unduly prejudiced” by the charging order
being made.
• Could the creditor have given you a secured
loan when you first took out the loan? If they
decided to offer an unsecured loan instead, this
could be particularly relevant if you have other
unsecured creditors who may be disadvantaged
by a charging order being made.
• There are other ways the court could enforce
payment of the debt. You could ask the court
to make an instalment order so you make
monthly payments you can afford, or an
attachment of earnings order so that the
instalments would come directly from your
wages. This is only useful if you are employed
and your employment would not be at risk. We
have a factsheet on “Attachment of Earnings in
the County Court”.Phone us for advice.
• If your debt is covered by the Consumer Credit
Act you can apply for a Time Order. Ask the
court to look at this application before the
charging order. A Time Order can change the
monthly payments and extend the length of
time you pay the debt for. We have a factsheet
on “Time Orders”. Phone us for advice.
• If you owe less than £5,000 in total to all your
creditors, you can argue that the debt should be
included in an administration order rather
than the charging order being made final. We
have a factsheet on “Administration Orders”.
 Phone us for advice.
• If you are likely to be made bankrupt, you can
argue that a charging order would give the
creditor an unfair advantage over other
unsecured creditors.  Phone us for advice
about this.
• If your home is worth less than your mortgage
(also known as “negative equity”), then you
can argue it is not worth a charging order being
Charging Orders in the County Court
made, as the creditor would not be paid off,
even if they forced your home to be sold.
• If the debt is very small in comparison to the
amount of equity in your home, argue that a
charging order would be unfair.
• You should point out any particular hardship
which your family would suffer if a charging
order was to lead to the sale of the home.
This is particularly important if the debt is in
your name but you own your home jointly so
it is not even your partner’s debt.
If none of these arguments are successful and the
court makes a final charging order, you can still
ask the court not to let your house be sold as long
as you pay monthly instalments. Make an offer to
pay in monthly instalments at the hearing. If the
court will not look at your offer at the hearing,
you can still apply to pay in instalments by using
an application form called N245. For details of
how to apply we have a factsheet on “Reducing
Payments on a County Court Judgment”. 
Phone us for advice.
THE HOUSE IS IN JOINT NAMES
BUT THE DEBT IS IN MY NAME
If the debt is in your sole name, but you own the
house in joint names with someone else, they have
the right to tell the court all the circumstances and
why they would suffer hardship if a charging
order is made. They should have been sent a copy
of the interim charging order and given an
opportunity to go to the hearing to put their
points. For example:
• Who paid for the deposit to buy the home?
• Who has made the mortgage payments since?
• If there are children at home, ask the court to
put a condition that the house cannot be sold
by the creditor until the children have grown
up.
• The co-owner will need to file and serve
written evidence of their objections at least 7
days before the hearing.
If a charging order is made by the court, then it
will only apply to your share of the property.
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I ALREADY HAVE AN INSTALMENT
ORDER AND AM NOT BEHIND
WITH IT
If you have kept up with instalments on a
county court judgment then the court should
not make a final charging order. According to
a case called Mercantile Credit Co Ltd v Ellis in
1987, a charging order should only be made if
the payments on a judgment are in arrears or
you were ordered to pay the judgment in one
lump sum immediately (forthwith) and didn’t
pay. This case is very important. If you are in
this situation and still have an interim charging
order made, you MUST go to the hearing and
take evidence that you have kept up with the
instalments ordered and mention this case to
the district judge. Phone us for advice.
DIVORCE AND SEPARATION
If you are currently involved in divorce
proceedings, or a dispute over dividing up the
former matrimonial home, then you must get
detailed legal advice from a solicitor. You may be
able to stop a charging order being made,
depending upon the stage in the divorce
proceedings.
INTEREST
If a creditor has taken the debt to the county court,
they may be able to add extra interest once a
charging order is made. Interest cannot be added
if:
• the debt is for an agreement regulated by the
Consumer Credit Act. This includes most
ordinary credit agreements, including bank
overdrafts.
or
• the debt is less than £5,000 in total, even if it is
not covered by the Consumer Credit Act.
• If the debt is more than £5,000 and not covered
by the Consumer Credit Act, then interest is set
by the court and runs at a standard rate.
Charging Orders in the County Court
If your creditor is arguing they can charge interest
after a county court judgment, we have a factsheet
that my be helpful,  phone us for advice.
WHAT DOES A CHARGING ORDER
AFFECT?
A charging order may be made against any item in
which you have “an interest”. This usually
means property that you own (or part own) and
will usually be your home. If you own your home
in your sole name, then the house will be covered
by the final charging order. If you own your
home in joint names with someone else then the
charging order will cover your share or "beneficial
interest” in the property.
CAN THE CREDITOR SELL MY
HOME?
It is rare for the court to allow a creditor who has
a final charging order to sell your home. Most
creditors are prepared to wait for you to sell your
home at some point in the future and to be paid
out of the proceeds of the sale. If a creditor is not
prepared to wait, then they can apply to the court
for a hearing for an order for sale. It is up to the
court to decide whether to make an order for sale
or not.
The court should take into account the factors
outlined above in the section “How can I stop a
charging order?”.
The court can order a sale where:
• The debt is in your sole name and you are the
sole owner.
or
• The debt is in both the names of the joint
owners of the house.
• If the debt is in your sole name and the house
is in joint names, the creditor gets an "interest"
in the house once the charging order is made
final. This means the creditor can apply to the
court for an order for sale to realise their
"interest" in your house. All joint owners (or a
married person who is not a joint owner but
has an "interest" in the property) should be
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 part of the court proceedings so they can
explain their case to the court as well. They
should be sent a notice of the hearing and be
allowed to attend.
At the hearing the court must look at the
following:
• Is there enough equity in the house to cover
any mortgages and the charging order debt?
• When you bought the house what did you buy
it for? Is it intended as a long-term family
home? Is it imagined that an elderly person
will live there for their lifetime?
• Welfare of any children should especially be
taken into account. Are there special factors
such as age, disability or illness? There may
be a need for stability at school. The effect on
the children of moving house should be
considered.
• If the debt is in your sole name, argue that it is
not fair for the whole family to lose their home
because of a debt belonging to one person.
The court should look at whether the interests of
the creditors should outweigh the interests of the
family. Argue that, under The Trusts of Land &
Appointment of Trustees Act 1996, the court has
discretion to say the family's interests outweigh
the creditor’s interests.
You can still make an offer of payment at this
stage and ask the court not to order a sale as long
as you keep up with the payments. You can ask
the court to adjourn the order for sale proceedings,
or to suspend the order.
Charging Orders in the County Court
Remember, it is very unusual for an order for sale
to be made. If your creditor is threatening to have
your house sold, you will need specialised legal
advice. Phone us for advice.
PAYING OFF A CHARGING ORDER
If you pay off the amount you owe under the
charging order, you can apply to the court for the
order to be discharged. Ask the court for a
certificate of satisfaction on your county court
judgment and include evidence of payment. It is
usual for creditors to inform the Land Registry
that the interim and final charging order have been
removed.
For details of the District Land Registry that
covers your area contact:
Land Registry Headquarters.
32 Lincoln’s Inn Fields
London
WC2A 3PH
Tel No: 020 7917 8888
www.landreg.gov.uk
You can also check details of charges on property
on the Land Registry website
www.landregisteronline.gov.uk. The creditor may
say there is interest on the county court judgment
which is still outstanding. If the creditor disagrees
that you have paid the charging order in full, 
phone us for advice.
If you have enough equity in your home, you can
also pay off the charging order if you move house,
as the charging order will automatically be paid
off as part of the sale process.
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 COUNTY COURT FEES

DO I HAVE TO PAY A FEE FOR AN APPLICATION IN THE COUNTY COURT?

There will usually be a fee to pay with your application. You can ask the court not to pay the fee in
some circumstances. The form you will need to fill in is called an EX160 "Application for a fee
exemption or remission." This form needs to go to the court with your main application. If the
court agrees your application you will not have to pay the fee. If you pay a fee when you should
have been exempt or would have qualified for a remission, then you have six months to apply to the
court for a refund.

EXEMPTIONS

If you are on income support or income-based jobseeker’s allowance (JSA) you can ask the court
for exemption from the fee. You need to give the court proof that you are getting the benefit. You
will be exempt if you or your partner are on the guarantee credit element of pension credit.
If you are on working tax credit you will be exempt from the court fee in these circumstances:
if you are also on child tax credit,
or
you receive the disability or severe disability element in your working tax credit
and in either case
your gross annual income taken into account for working tax credit is £15,460 or less (from 6 April
2006).
You will need to show the court your tax credit award notice to qualify.
If you do not qualify under these rules for an exemption then you can ask for the fee to be remitted
or waived by the court. See below.

REMISSIONS

Ask the court for the fee to be remitted (or waived) if it will cause you what the court calls “undue
financial hardship”. You can use the same EX160 application form. You may be on a low income
or a benefit that does not automatically exempt you from paying the fee. Give as much information
about your circumstances as you can. Explain your financial situation on the application form and
any exceptional circumstances that apply in your case. The court can remit all or part of the fee
depending on what they decide you can afford.

REMEMBER: You can always contact us for advice about any difficulty you have in
dealing with your debts.

Freephone: 0800 074 6918

Website: www.insolvencyhelpline.org
© Copyright Money Advice Trust (updated May 2006)

Whilst we endeavour to keep our factsheets as up to date as possible, The UK Insolvency

Helpline cannot be held responsible for changes in legislation or for developments in
case law since this edition of the factsheet was issued.

Charging Orders in the County Court

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