IVA Glossary
C
Charging order
A charging order is usually being issued by the court, and it gives the right for a certain creditor to recuperate his loss by having the debtor sell his/her property. A charging order can be issued against a property, land but also securities. A charging order will not obligate the debtor to sell his / her property, but will oblige him/her to repay the owed amount to the creditor in the first place, whenever the respective property gets sold.
For example, if an individual has taken up an unsecured loan (usually a larger amount), but has not kept up with the required repayment schedule, the lender can easily go to court and ask for a charging order to be placed against the debtor's property. This is the most basic way of switching an unsecured loan into a secured one, if the creditor requires it.
However, before being able to ask for a charging order to be issues against a debtor, the creditor must file for a CCJ (County Court Judgment) in prior. Only if the debtor does not respect the repayment schedule agreed upon in the CCJ, may the creditor proceed to asking for a charging order.
Unless the creditor asks for what is known as a "force of sale", the creditor is under no obligation to sell his/her property in order to pay back the lender. Generally, it is a much lengthier process until the final charging order is being issued by the court.
A charging order usually puts a stain on the creditor's records at the Land Registry, and this means that he/she cannot freely make decisions about selling ore re-mortgaging the property. It is always a much safer and better solution if the debtor sells the property on his/her own, rather than waiting to have it repossessed.
For example, if an individual has taken up an unsecured loan (usually a larger amount), but has not kept up with the required repayment schedule, the lender can easily go to court and ask for a charging order to be placed against the debtor's property. This is the most basic way of switching an unsecured loan into a secured one, if the creditor requires it.
However, before being able to ask for a charging order to be issues against a debtor, the creditor must file for a CCJ (County Court Judgment) in prior. Only if the debtor does not respect the repayment schedule agreed upon in the CCJ, may the creditor proceed to asking for a charging order.
Unless the creditor asks for what is known as a "force of sale", the creditor is under no obligation to sell his/her property in order to pay back the lender. Generally, it is a much lengthier process until the final charging order is being issued by the court.
A charging order usually puts a stain on the creditor's records at the Land Registry, and this means that he/she cannot freely make decisions about selling ore re-mortgaging the property. It is always a much safer and better solution if the debtor sells the property on his/her own, rather than waiting to have it repossessed.
