If I have a charging order can I sell my house?

Charging orders are increasingly being used by banks to secure personal debts which have fallen into arrears. But should homeowners worry that this will make it more difficult to sell their homes?

If you are struggling to pay personal debts and you own a property, there is a possibility that the banks to whom you owe money will try and place a charging order against your home.

The existence of a charging order means that the associated debt becomes secured against the property.

If the debt is not paid, your creditor can not force you to sell your home without a further order from the court called an order of sale.

In fact, it is very unlikely for an order of sale to be granted and therefore your creditor will not be able to force a sale process. It is far more likely that the charging order will simply remain in place until you decide to sell your property. At this time, the outstanding balance will be paid out of any available equity.

Treated like a secured loan

You remain in control of if and when you sell your property. When you do decide to sell, the charging order will be treated in the same way as any other secured loan.

The solicitor who assists you with the sale will identify that the charge has been placed against the property.

As soon as they receive the funds from the buyer they will repay the outstanding mortgage and the outstanding debt associated with the charging order before any remaining equity is given back to you.

If there is not enough equity to pay the debt associated with the charging order, it will simply remain unpaid and the associated creditor will need to continue their own debt collection procedures against you.

No reason to inform prospective buyers

The existence of a charging order will not make it any more difficult to sell your property if you choose to do so.

There is no reason for you to inform your estate agent or any prospective buyers of the existence of a charging order.

As such a charging order does not make your property any more or less saleable as it is simply treated as a secured loan.

Even though the existence of a charging order will generally not result in the forced sale of your home and will not dictate when the property can be sold, this does not mean that it should be ignored.

Once a lender has secured their debt with a charging order, they are allowed to add statutory interest of 8% to the outstanding debt.

If nothing else, for this reason you should always endeavour to repay the outstanding debt as soon as possible.

If you are struggling with debt, visit www.BeatMyDebt.com

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