Using a charging order to recover a debt secured with a personal guarantee

  • Debt Recovery
  • Litigation
  • Personal Bankruptcy

If you are owed a debt which has been secured with a personal guarantee (“PG”) and the individual who provided that PG (“the Debtor”) has a beneficial interest in land, securities (for example, stock, dividends and interest in a trust) or has other assets, you may wish to consider imposing a charge over the same. Once a charge is in place, you can then seek an order for sale which would achieve a realisation of funds.

This method is most effective where there is substantial equity in land and the Debtor is the sole owner. Of course, we would not recommend pursuing a charging order and subsequently an order for sale if any relevant property did not have sufficient equity or if numerous individuals had an interest in the same. It is therefore important to consider the state of the Debtor’s resources before seeking a charging order.

By carrying out an official copy entry search you will be able to ascertain whether the Debtor is the legal owner of the property and discover whether there are any pre-existing charges on the title which will have priority over your potential charge, such as a mortgage. 

An application for a charging order has two stages: (1) an interim order; and (2) a final order. The interim order is usually made without a court hearing. Once made, you can register the same with the Land Registry which will stop the Debtor from selling any property without your knowledge. Depending on the information provided in your application, the court may decide that a full hearing ought to take place in order to make the interim order final. If and when an interim order is made final, you will need to update the Land Registry.

If you require any advice in relation to obtaining a charging order in relation a debt you are owed, please do not hesitate to call our specialist dispute resolution team on 020 7467 3980 or alternatively, contact us here

Article Author

Sarah Chambers

Sarah Chambers

Chartered Legal Executive