Enforcing a Charging Order

If a court decides that a debt is properly owed to the creditor, it will make a judgment order against the debtor. If the debtor still does not pay the debt, the creditor will need to apply to the court to enforce that judgment. There are a number of debt enforcement options available, including Charging Orders. A Charging Order is a legal charge on the judgment debtor’s property for monies owed to the creditor. If the property is sold, the full amount of the charge has to be paid before any of the proceeds of the sale can pass to the debtor. To force the sale of the debtor’s home, the creditor would need to apply to the court for an Order for Sale. It would be for the court to decide whether or not to make such an order.

The rules about when a judgment creditor can apply for a Charging Order changed significantly from 1 October 2012. Specifically, sections 93 and 94 of the Tribunals, Courts and Enforcement Act 2007 were brought into force by the Tribunals, Courts and Enforcement Act 2007 (Commencement No.8) Order 2012. Both sections amend the Charging Orders Act 1979.

Section 93 came into force on 1 October 2012. It amends the Charging Orders Act 1979 so that where a debtor is required by a county court or High Court to pay a sum by instalments, an application for a Charging Order may be made straight away by the creditor even though there has been no default in payment. However, the court must take the fact there has been no default into account in deciding whether to make the order. In any event, an Order for Sale to enforce the Charging Order may not be made where there has been no default in payment.

Section 94 came into force on 17 May 2013. It inserts into the Charging Orders Act 1979 a new provision (section 3A) giving the Lord Chancellor a power by regulations to set financial thresholds for the making of Charging Orders and Orders for Sale. The Charging Orders (Orders for Sale: Financial Thresholds) Regulations 2012 came into force on 6 April 2013. The Regulations introduce a financial threshold of £1,000 for the enforcement of Charging Orders by an Order for Sale, where the Charging Order relates to a debt owed under an agreement regulated under the Consumer Credit Act 1974.

This note provides a brief overview of the different types of debt enforcement methods available to a creditor who is in possession of a court judgment. The rest of the note deals only with Charging Orders; how charging orders are now granted by the court and enforced by way of an Order for Sale.