Once a claim for outstanding debt has been made and a judgment is obtained to claim back the money owed to you, there are a number of ways in which this can be enforced.
Sara Beaumont, a director based at WHN’s Bury office and specialist in debt recovery, shares her top tips on using charging orders to recover outstanding debt.
Charging orders are a mechanism to secure your judgment over property, whether that is land, stocks or shares, so these orders are particularly effective in securing funds if you know that the debtor is about to sell their property.
Check property ownership
Before you do anything it is important to ensure that the debtor is the owner of the property you are looking to make an application against. A land registry search can help confirm this.
The searches will reveal if other charges have been made and whether these will take priority over yours, so if the search finds that a series of charges are already registered, then you may want to consider other enforcement options. This may be the case particularly in instances where the property is not of high value as the price of the property may not be enough to cover all of the claims made.
To ensure the greatest chance of securing the funds rightly owed to you, an application should initially be made for an interim charging order. This will prevent the debtor from selling their property and siphoning funds without your knowledge before the final order is made.
The charging order process
Once the interim charging order is granted and recorded with the land registry, a hearing date will be set to allow the debtor the opportunity to object to the final charging order. At the hearing the court should grant the final charging order unless the debtor can provide evidence to oppose the decision, such as the application being disproportionate to the amount of debt owed.
The final charging order will then be registered with the land registry, ultimately securing the debt against the property. This means that once sold, the debtor must pay you back out of the proceeds of the sale.
The process is similar when obtaining a charging order over stocks and shares. In this instance the information would be obtained from Companies House rather than the land registry.
While the charging order itself secures the debt, it is not a means of forced payment so it doesn’t necessarily result in the debt being recovered straight away as the funds cannot be received until the asset is sold.
There is no quick-fix method to recovering debt, but charging orders are a useful tool to put pressure on the debtor to release the charge, particularly if they are wishing to refinance or sell their property.
How legal professional support can help with debt recovery
Debt collection is a complex area of law, so it’s important that you seek specialist advice before you embark on recovering debt to ensure that you secure the money that is rightly owed to you and that you follow the correct legal procedures. Find out more in our helpful guide: How a legal professional can help with debt recovery: A guide for businesses – WHN Solicitors
For further information on dealing with debt recovery see our additional articles:
- How to obtain outstanding debt through insolvency proceedings
- Can I recover funds from a debtor’s wages?
- How to recover debt through bailiffs and enforcement officers
- How to use third party debt orders to recover funds
For more information on recovering outstanding debt through a charging order please call Sara Beaumont on 0161 761 4611 or email sara.beaumont@whnsolicitors.co.uk
