Charging order

A charging order, in English law, is an order obtained from a court or judge by a judgment creditor, by which the property of the judgment debtor in any stocks or funds or land stands charged with the payment of the amount for which judgment shall have been recovered, with interest and costs.

United Kingdom

The provisions of charging orders in the UK are under the Charging Orders Act 1979 (formerly under the Judgment Acts 1838 and 1840)

A charging order can only be obtained in respect of an ascertained sum, but this would include a sum ordered to be paid at a future date. An order can be made on stock standing in the name of a trustee in trust for the judgment debtor, or on cash in court to the credit of the judgment debtor, but not on stock held by a debtor as a trustee.

The application for a charging order is made to the appropriate court normally without notice and considered by a judge without a hearing who will normally make an interim charging order (formerly a charging order nisi) and after a subsequent hearing on notice a final charging order (formerly a charging order absolute) can be made.

In deciding whether to make a charging order the court shall consider all the circumstances and in particular any evidence as to the personal circumstances of the debtor and whether any other creditor would be likely to be unduly prejudiced.

The charging order may be made subject to conditions.

If necessary, a stop order on the fund and the dividends payable by the debtor can be obtained by the creditor to protect his interest.

A solicitor employed to prosecute any suit, matter or proceeding in any court, is entitled, on declaration of the court, to a charge for his costs upon the property recovered or preserved in such suit or proceeding. (See Rules of the Supreme Court, o. XLIX.)

As to court procedure in England & Wales see CPR73 [1] and PD73 [2]

Increase in charging orders as an enforcement action in England and Wales

The reality of charging orders is that creditors can secure debts that they sold as unsecure, an unsecured debt has higher interest attached to it. Historically charging orders were a last resort for creditors as the Courts were reluctant to grant them. There has been a significant shift recently though with a huge increase in applications for charging orders and the orders being granted by the court. On Saturday 22 March 2008 the Times reported^[1] "The Courts Service received a total of 92,933 applications in 2006, compared with only 16,014 in 2000. In 2006 the courts approved 72 per cent of applications from lenders to secure customers' debts against their homes, up from 60 per cent in 2000." On Sunday 13 April 2008 the Sunday Mirror reported^[2] "An alarming 97,017 'charging orders' were made in 2007 - up from 66,911 in 2006." §

References

1. ^ Charles, James (20 March 2008). "Creditors want your money or your home". The Times (London). http://business.timesonline.co.uk/tol/business/money/borrowing/article3592024.ece. Retrieved 28 April 2010. 
2. ^ Alistair Darling pledges to help homeowners - Sunday Mirror

 This article incorporates text from a publication now in the public domain: Chisholm, Hugh, ed (1911). Encyclopædia Britannica (11th ed.). Cambridge University Press.