Enforcement of a Charging Order – Obtaining a Charging Order is not the end of the line

If your debtor owns property, then obtaining a Charging Order against that property and taking steps to enforce it, can prove a very successful tool in recovering your outstanding debt.

It is often believed that once a creditor obtains a Charging Order against a debtors property then it is simply a waiting game until the property is sold by the debtor at some future date before the sums due can be recovered but this does not have to be the case.

It is possible for a creditor to take steps to enforce the Charging Order and ultimately obtain an Order for the sale of the property.

The Court does have discretion when considering whether to make an order for sale of the property. In cases where there are children living at the property or where the debtor is vulnerable, then the Court may be reluctant to make an order for sale. However, where the property is only occupied by the debtor or by other adults, the Courts are willing to consider making an order for sale.

There is no minimum sum for an order for sale except where the debt falls under a the Consumer Credit Act where there is a threshold that provides that a regulated debt cannot be less than £1,000 if the charging order is to be enforced by an order for sale.

The factors which the Court will consider when considering whether to make an Order for Sale include:

• the amount of the judgment as against the current value of the property;
• the conduct of the debtor e.g. whether they have made any payments;
• any other methods of enforcement available to enforce the judgment. 

If the debt has been outstanding without any instalment payments being made and all other enforcement methods have proved unsuccessful or are not applicable and the debtor has made no real effort to co-operate, then providing there is sufficient equity in the property, it should be possible to obtain an order for sale.

An order for sale provides a set period by which payment must be made (usually between 14 to 28 days) for the debtor to pay the Judgment debt in full, failing which they must provide vacant possession of the property. If after the deadline, the debtor has not paid or vacated the property, then the next step will be to apply to the Court for a Warrant of Possession which means that the Court bailiffs will fix a date and time to take possession the property. Once you have possession of the property, you can then market and sell the property and from the proceeds of sale all prior charge holders will be paid and you will then be paid your Judgment debt and the costs of sale. It is also usual to obtain a costs order in relation to the costs of obtaining the order for sale which can then also be paid from the proceeds of sale and then any balance left can be paid to the debtor.

It is worth noting that the current situation with Covid does not prevent a creditor who has obtained a Judgment from obtaining a Charging Order and then if necessary, applying to the Court for an Order for Sale. The Courts are still progressing cases and no hearing is usually required to obtain the Charging Order. Even with a Claim for an Order for Sale, it is possible to progress proceedings up to a hearing date which the Courts can then choose to deal with either in person, by telephone or video call or adjourn until a date after lockdown has been lifted.