Charges against your property

How do you get charges against your property and what do they mean?

Charges are placed against your property when a debt hasn’t been paid and the lender (creditor) applies to have their debt secured against an asset you have (namely, your house).

You can have charges placed against your house if you have fallen behind on payments for things like:

• Credit Cards
• Loans
• Mobile Phone Bills
• Car payments (where the car was repossessed but the resale value wasn’t enough to recover the full debt)

If you can’t keep up with the payments and haven’t communicated with the creditor as to why and how you will manage the debt, they may resort to taking a charge out against your house.

This means they are legally entitled to receive their outstanding debt, plus interest and fees, from the sale profits when you sell your house.

In rare cases, the creditor may even make a request that you sell straight away in order for them to recoup their debt sooner. This is called an order for sale and there are several ways that this can be fought.

If you find yourself in this situation, I always recommend reaching out to The Citizens Advice Bureau first as they can guide you on the best approach. You can argue against this, if it can be considered unreasonable or unfair for you to sell up and move (if there are other people living in the home for example) or if there isn’t enough equity in the house to cover the debt.

You can even use other creditors as a benchmark for what’s reasonable. If they also have charges against your home, but aren’t pursuing a Final Charging Order, they can support your argument against Final Charging Orders.

How to avoid getting charges against your property.

Of course, the best way to avoid charges against your home is to always pay bills in full and on-time. But we live in the real world.  I work with lots of people who have found themselves in financial trouble through circumstances beyond their control – losing a job, divorce, bereavement, mental health problems, can all lead to money struggles which quickly spiral when a bill that can’t be paid then has interest and late fees added to it.

Because of the spiralling nature of these things, I routinely speak with people who have bags of unopened mail. This is such a common coping strategy, but deep down we all know that this avoidance will only make the problem worse – and it always does.

By leaving mail unopened, you miss letters warning you of a creditors intent to secure a debt against your home, court dates, and other really important things that you can fight and work with if you are aware that they’re happening. Opening that bag after weeks or months brings pain and multiplication of whatever problems made you stop opening them in the first place.

If you’re worried that you’ve aready left things too long and are dreading going through the mail, it will always be the better option to catch up right now, rather than waiting even longer.

You will find that most creditors would rather accept a MUCH smaller lump sum, or a reduced payment through a long-term payment plan, than go down the legal route. It is costly and time-consuming for them, too. So always keep up the communication with your creditors, no matter how bad it gets.

How do you find out if you have charges against your property?

If you have been avoiding your mail, you could have charges against your home that you’re not even aware of. I have worked with several people who came to me after going a long way down the road selling their property, only for the charges to come to light right at the end. This results in them now having far less to take out of the property than they thought they had, meaning they can no longer afford their next property, or leaving them in negative equity.

So, when sellers find me because they’re having trouble with debts, one of the first things I do is check the land registry for charges against their home.

The Land Registry acts like a giant register for every property in the UK. It has details about the price the property received at each sale, and lists any current charges against it. Not only is it a quick and simple process to check this, it costs £3! You can check your property – or any other property, here.

It’s crazy how simple this is to carry out, yet it rarely gets thought about early in a house sale process, often leading to the sale collapsing much further down the line. A client of mine sent me this on the subject (shared anonymously with permission):

“I can’t believe how much better I felt after just one meeting with you!! Not the Solicitor, Estate agent or myself had even picked up the charges against my house that you told me about at our first meeting, and they’ve been dealing with my house sale for months!”

How can you undo Charges against your property?

When you have paid off the charging order, plus any court fees or costs which have been added to it, the creditor will usually inform Land Registry that charges no longer apply. If they don’t you can apply for it to be discharged. Ask for a certificate of satisfaction from the court as proof that everything has been cleared.

If you’re unable to pay off the debt, you can look at an IVA (Individual Voluntary Arrangement) which is a legal agreement between you and those you owe money to and can give you more control of your assets than bankruptcy. If accepted, you’ll pay less, have your interest frozen, and pay back far less then the original debt. Seek help from an exert if you’re considering this option.

Support for Charges against your property

Charging Orders advice from Citizens advice bureau
Debt Support Trust
IVA advice from Money Advice
IVA advice from gov.uk

Contact the Samaritans

I’m Joanne. I’ve lived and breathed property for longer than I care to remember! This blog is to provide advice and support with problems surrounding property, and life in general.

Previously on the blog…