DMBM667330 - Enforcement action: county court proceedings: charging orders: when to consider applying for a charging order
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Charging orders on land or property
A debt manager may authorise an application for a charging order against a judgment debtor, provided that:
- you have been unable to obtain a solicitor’s undertaking (DMBM900030)
- the judgment debtor is unlikely to offer a voluntary legal charge on their land or property (if you need any advice about voluntary legal charges, email (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- the land or property is owned by the judgment debtor, solely or jointly; that is, the judgment debtor has a ‘beneficial interest’ in the property
- the land or property to be charged is in England or Wales
- there is a realistic prospect that, after payment of all fees and clearance of any mortgage or loan secured on the land or property, there will be sufficient net proceeds of sale to cover all or most of the judgment debt (where the land or property is jointly owned, you must consider only the judgment debtor’s share of the proceeds)
- the land or property is not expected to be sold for at least 30 days. There is an interval of at least 30 days between the date of the interim charging order and the completion of a sale. The purchaser of land or property is protected against new registrations during this period.
Where judgment was entered on or before 30 September 2012, you can only apply for a charging order where payment of the judgment debt is in arrear under the terms of the judgment or order. For judgments entered on or after 1 October 2012, you can apply for a charging order to protect the debt, regardless of whether instalments are being paid on time or not.
Tax credit overpayment debts
Where the judgment debt relates entirely to a tax credits overpayment that did not arise following a compliance review, you should not apply for a charging order on the judgment debtor’s primary residence. See the guidance at DMBM555050 for alternative enforcement methods.
However, if the judgment debtor owns either a:
- second property
- separate piece of land in addition to their primary residence
you can apply for a charging order on that second property or separate piece of land.
If the judgment debt includes either:
- non-tax credits debts
- a tax credits overpayment that arose following a compliance review
you can apply for a charging order on any property or land owned by the judgment debtor, including their primary residence.
Charging orders on financial products
A debt manager may authorise the application for a charging order against a judgment debtor, provided that the financial product is held by the judgment debtor, solely or jointly; that is, the judgment debtor has a ‘beneficial interest’ in the product.
Where judgment was entered on or before 30 September 2012, you can only apply for a charging order where payment of the judgment debt is in arrear under the terms of the judgment or order.
Tax credit overpayment debts
Unlike the restrictions mentioned above relating to charging orders on land or property, there are no such restrictions relating to charging orders on financial products.
Further arrears not subject to county court judgment
Where there are arrears not subject to a county court judgment and time permits, you should:
- take further county court proceedings for those arrears
- obtain judgment before applying for a charging order.
Multiple judgments against the same debtor
Where you have more than one judgment against a debtor, you may apply for a single charging order as long as the judgments are in the same court. If necessary, transfer all actions to the judgment debtor’s home court.