Charging order interest: when it applies and how to check it

Interest on a debt secured by a charging order depends on the judgment, agreement and legal rules. A charging order does not create an automatic universal interest rate.

This guide concerns England and Wales. A charging order can secure a judgment debt against your interest in a property or another eligible asset. A separate order for sale is needed for a creditor to force a sale through this procedure.

Does every charging order carry 8% interest?

No. Statutory post-judgment interest can apply to eligible County Court judgments of at least £5,000, generally at 8% a year. Important exceptions apply, including judgments for debts under agreements regulated by the Consumer Credit Act 1974. The existence of a charging order does not remove that exception.

The County Courts (Interest on Judgment Debts) Order 1991 governs entitlement to statutory interest. The applicable rate is set by the Judgment Debts (Rate of Interest) Order 1993. Do not assume that a creditor’s quoted figure is correct simply because the balance exceeds £5,000.

Can contractual interest continue after judgment?

Contractual interest is a separate question. It may depend on an enforceable term providing for interest after judgment, the relevant consumer-credit requirements and required notices. A creditor cannot establish entitlement merely by labelling a charge as interest. The distinction between statutory and contractual interest was considered in Director General of Fair Trading v First National Bank.

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Ask for the original agreement, judgment, charging order and a statement separating principal, court costs, interest and payments. Request the legal basis, rate, start date and calculation for each interest amount. A debt adviser or solicitor can check what is payable and what the charge actually secures.

How do I challenge an application?

An interim charging order is usually considered initially without a hearing. For the usual Civil National Business Centre procedure, objections to a final order must be filed and served within 28 days after service of the application and interim order. Other procedures have different deadlines, including objections at least seven days before a listed hearing. Follow the documents you receive and get advice promptly.

A final order is not inevitable, and some applications are decided without a hearing. The court can consider objections, and there are procedures to seek variation or discharge. See Civil Procedure Rules Part 73 and the official charging-order guidance.

Will the charge or interest disappear after six years?

Do not assume that a charging order expires after six years or that interest automatically stops at that point. Limitation, enforcement of a judgment, recovery of interest and entries on a credit report are different issues. The particular documents and enforcement method need checking.

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A CCJ normally stays on the register for six years unless it qualifies for earlier removal. That credit-reporting period does not itself discharge a charge against property. Obtain advice before relying on the age of a debt.

What happens if I sell or remortgage?

Tell the conveyancer or mortgage adviser about the order. The consequences depend on the ownership, terms of the charge and Land Registry entry. A charge over a sole owner’s legal estate and a restriction protecting one joint owner’s beneficial interest are not identical. See HM Land Registry’s charging-order guidance.

Ask the creditor for an itemised settlement figure. After payment or discharge, check what evidence and application are needed to remove the relevant registration; do not assume it disappears automatically.

Can a debt solution remove the charge?

A charging order can change an unsecured debt into secured debt, which affects the options. Do not assume an IVA, debt relief order, bankruptcy or DMP will remove it or protect the home. A homeowner cannot normally obtain a debt relief order, and a DMP does not bind a secured creditor to abandon its rights.

Get free debt advice before agreeing a payment you cannot sustain or choosing an insolvency option. If an order-for-sale claim has arrived, obtain urgent legal or housing advice and respond by the stated deadline.