Categories

  • No categories

Most Popular

Most Viewed

Can My Creditors Take My House?

Money Savings Advice Can creditors take my house?

While mortgage debts and other secured debts against your home could lead to a forced sale, unsecured creditors can also apply for charging orders against your property.

Can You Lose Your House

It is possible for creditors to force the sale of your home. You would first have a CCJ against you, and then a Charging Order, which would secure the debt against your home. The creditor could then request an Order of Sale.

The charging orders would not necessarily force the sale of your house but would restrict your ability to profit from any sale.

It will be no surprise to learn that mortgage debts and other finance secured against your property could lead to a forced sale. However, many people may not be aware of the powers of unsecured creditors.

We are talking about credit cards, personal loans and other similar finance which is unsecured, which means there are no assets directly related to the agreement.

Looking for other information on debt? This guide has info on ‘Can creditors take my house?’. We have also writen extensively about:

We update all our guides regularly. If you are researching debt and we haven’t got an exact guide that helps you, keep coming back as we update daily.


What Happens if I Fall Behind With Mortgage Payments?

There is a general assumption that mortgage companies will repossess your home as soon as you begin to fall behind with mortgage payments. This is wrong. Repossession is a last resort for any mortgage lender, and you would need to be in serious arrears for this to be a consideration.

It is in the best interest of the mortgage holder and the mortgage company to find some middle ground where possible. This may involve a refinancing of your mortgage, extension of the term or maybe even a short-term mortgage holiday to let you get back on your feet.

That said if you allow your mortgage arrears to build-up then, unfortunately, your mortgage company may have no option but to seek repossession.


More than one million people a year get debt advice, but there are about 8.3 million who are over-indebted. A recent review for the Government broadly estimated that advice needs to double in the next few years

Category: Debt Small

Load More


How Can Unsecured Lenders Secure Their Debt Against My Home?

It seems a little bizarre to suggest that unsecured lenders can go through the courts to secure their debt against your home. They can. Only after a CCJ has been upheld in the courts can an unsecured lender apply for what is known as a Charging Order.

This effectively switches the basis of the debt from unsecured to secured, against your home. It is worth noting that unsecured creditors can apply for a CCJ and a Charging Order at the same time. However, the CCJ application would need to be successful in order for any Charging Order to be put in place.

What Is a Charging Order?

A Charging Order does not force you to sell your home to pay off a creditor, but it does place your creditor second in line behind your mortgage company as and when your property is sold.

So, if for example, you were also behind with your mortgage payments, your home was repossessed and sold, the mortgage company would be repaid first and then the creditor with the Charging Order.

Can an Unsecured Creditor Force a Sale of My Home?

In theory, an unsecured creditor could apply for a Charging Order and then an Order for Sale which would effectively force you to sell your property, repay the mortgage company and then the unsecured creditor. While this is the next stage on from a Charging Order, the debt would need to be more than £1000, and in reality, it is very rare.

How Common Are Charging Orders?

There are few statistics regarding Charging Orders and Orders for Sale. However, those released by the Ministry of Justice back in 2013 suggest that the number of charging orders issued was just 7% of the number of CCJs with Orders for Sale accounting for less than 0.5% of Charging Orders.

If we put this into perspective, in 2016, there were 912,000 CCJs so using the same split; this would suggest around 64,000 Charging Orders and less than 300 Orders for Sale. These figures are by no means set in stone, but it does give you an idea of how the system works. It looks as though Charging Orders tend to prompt debtors and creditors to find a suitable arrangement.

What Will Happen to My Home if I Am Made Bankrupt?

While your home will be recognised as an asset and could potentially be sold to repay your creditors, this is not as straightforward as many people assume. Upon bankruptcy, the legal ownership of your home would be transferred to a trustee to prevent a sale. However, unless you have equity in excess of £1000, it is unlikely that your home would be sold.



Do I Still Need to Make Mortgage Payments While Bankrupt?

If possible, it is essential that you maintain your mortgage payments even if a bankruptcy order has been placed against you. If you fall behind with your mortgage payments then, as a secured creditor, your mortgage company could take action to repossess the property, force a sale and repay their debt.

The idea that you stop making any payments during bankruptcy is simply incorrect and dangerous.

Can HMRC Apply for a Charging Order for Non-Payment of Tax?

While the UK government has introduced an array of protection for consumers, deep in the small print of the 2013 budget was a suggestion that HMRC will be making more use of Charging Orders in the future. It appears this type of action will be used to recover both personal and business tax arrears.

Whether HMRC would then move onto Orders for Sale is unclear, but the authorities look set to use various tools to assist in the recovery of outstanding debts.

Can Creditors Take My House if There Is No Equity?

The simple answer is, why would they? If after repayment of your mortgage and other secured debts there is no equity left in your property, then there wouldn’t be any funds available to repay additional creditors. As a consequence, there would be no reason to push through a forced sale of your property.

However, your creditors could still use a Charging Order to stop you selling, refinancing or profiting from your home in any way.

Summary

The idea that your home will be repossessed as soon as you begin falling behind with mortgage payments, or unsecured creditors, is a myth. There are ways and means by which creditors can control the potential sale of your home, but very few will go through with a forced sale.

However, during these difficult financial times, it is important to honour your mortgage payments where possible. If unable to maintain your mortgage payments, then it is advisable to look at alternative arrangements.

Quick Debt FAQs


You only need to ask somebody who suffers from money anxiety disorder to realise how this can impact your life. It can prompt extreme behaviour from an individual which goes above and beyond just being concerned about money – it becomes a kind of obsession.

Category: Debt Large

The debt snowball method is a process by which you make minimum payments on all of your outstanding debts. Any surplus capital is used to top up repayments on your smallest debt which will be paid off quicker, and then you move onto the next smallest debt.

Category: Debt Large

Many local authorities in the UK will offer a local welfare assistance scheme which is there to help those experiencing extreme hardship. It is there to help with the cost of essential goods such as food, clothing, household items and covering your utility bills.

Category: Debt Large

While your home will be recognised as an asset and could potentially be sold to repay your creditors, this is not as straightforward as many people assume. Upon bankruptcy, the legal ownership of your home would be transferred to a trustee to prevent a sale.

Category: Debt Large

The issue of a CCJ will not be the first time that the creditor has tried to contact you to arrange payment of an outstanding debt, or an alternative arrangement. Ignorance, burning correspondence, binning the letters and just burying your head in the sand is not the answer.

Category: Debt Large

A CCJ will come after a default note has been added to your credit file will certainly have a huge impact on your credit score. Traditionally, like other debt management arrangements such as IVAs, a CCJ will remain on your credit file for six years.

Category: Debt Large

Load More


How Can Money Savings Advice Help You Reducing Your Debt?

Here at Money Savings Advice, we have partnered with some of the UK’s debt release brokers. They have already helped thousands of people reduce and remove a high percentage of debt, and if you are struggling with debt, they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers, then click on the below and answer the very simple questions.

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

Forgot Password

Register