What is the difference between an interim charging order and a final charging order?
There are two stages:
- The interim charging order, and
- The final charging order
Interim charging orders (N86)
When the people you owe decide to apply for a charging order:
1. They apply for an order through the court
This includes proof that you own, or jointly own, your house. You will not get this information.
They will get this information from the Land Registry.
2. The court allows the charging order
If they agree with the proof.
3. The court sends you the interim charging order (form N86)
You get a copy of the N86 form and the creditor's form N379. These show the reasons for the order.
The charging order is sent to:
- People who own the house or share the mortgage with you
- Your mortgage lender
- Any other lenders you have secured the property against
4. A warning is added to the Land Registry
This stops you from selling your house until the final charging order hearing.
- You will get a form B136 from the Land Registry about this
- You do not need to reply
5. The interim charging order goes ahead without a hearing
The court issues the final charging order after 28 days if you do nothing.
Objecting to a charging order
Write to both the court and creditor within 28 days of the date of service on the interim charging order.
The court may arrange a hearing to decide.
Reasons to object might include:
- Other creditors have not been informed about the application
- You are insolvent and there is not enough equity in to pay all your debts
- The property is not yours and you will not profit from the sale
- You have not missed any payments set by the court
- The creditor did not follow the proper process when applying
For example, they did not tell others named on the property, which they are required to do.
If a charge is placed on your property, you can ask the court to set conditions on the charging order.
For example, an affordable instalment order, suspending the charging order or applying conditions to it.
Setting an instalment order may be the easiest option as it is harder for the people you owe to take more court action if you keep up with these payments.
If no instalment order is set:
Final charging orders (N87)
If you do not write an objection, you may be subject to an order for sale. This means you may lose your home.
A court officer or District Judge will decide if a final charging order proceeds.
If you make written objections, or ask for other conditions:
The court may arrange a hearing at your local County Court hearing centre.
The hearing will be:
- In private chambers
- With a District Judge
- With a representative from the creditor
The judge will then listen to both sides and decide whether:
- To make the final order
- Decide what conditions (if any) to apply
You will get a confirmation letter from the court (form N87) when a final charging order is made.
What is an order for sale?
You need to keep making debt payments if you have a charging order.
Otherwise, creditors can apply to the court for an order for sale.
This forces you to sell your house to pay the creditor.
Orders for sale are only for debts of £1,000 or more.
If a creditor applies for an order for sale:
- There is another hearing
- You have a chance to explain your situation to a judge
- The order is only granted as a last resort
Does a charging order show on your credit file?
No. Only CCJs are recorded on your credit file but not separate charging orders.
These will remain on your credit file for six years from the date of issue.
Does a charging order expire after 12 years?
This only applies if you live in Scotland. In England and Wales the Land Registry records your charging order until the debt is paid. You will need to apply once it is paid to them to remove it.