How will a County Court Judgement affect my home?

If you are struggling to pay your debt it is likely that you will receive a county court judgement (CCJ). As a home owner this could lead to a charging order against your property.

A county court judgement is a court order requiring you to pay the debt that you owe.

Once in place, a CCJ is advertised in the Stubbs Gazette which publicises all such action mainly for the benefit of financial institutions such as banks and credit reference agencies.

Subsequently to the advertisement in the Stubbs Gazette, the credit reference agencies will register the CCJ against your credit file for six years. This will make it more difficult for you to borrow money in the future.

If the debt continues to go unpaid, the creditor could apply for an attachment of earnings against you so that payment is made directly from your wages.

Application for a charging order

If you are a home owner, it is becoming increasingly common for creditors who have issued a CCJ to then apply for a charging order. If a charging order is granted, this secures the unpaid debt against your property.

Having a charging order will generally have a minimal effect until you come to sell your house. If and when you choose to sell the property, the debt would have to be paid from the sale proceeds before any outstanding equity is given back to you.

However, a charging order does not mean that the creditor can force you to sell your home to get their money.

Could I be forced to sell?

The courts currently seem ready to grant charging orders because they believe that the creditor is subsequently unlikely to be to try and force the sale of the property. Such a forced sale could only ever happen if the creditor applied for an order of sale.

Creditors generally do not take this further action and courts will rarely agree to such applications. As such, most creditors aim to get the order simply to protect them against the possibility of you becoming formally insolvent.

If you were to undertake an IVA or declare bankruptcy at any point in the future, their debt remains secured against your property and they would be paid in full from the proceeds of the property’s sale over any other unsecured creditors.

As a homeowner, if you have debt which you are unable to pay, it is important to try and avoid receiving a CCJ. If you receive a CCJ and it remains unpaid, the creditor will often look to secure the debt against your property with a charging order. This then gives them added protection that it will eventually be paid.

In the majority of cases, your home is not directly at risk of forced sale. However, what you thought was an unsecured debt will become secured against your property thus reducing the equity in it.

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