We're probably all familiar with the line "Your home may be at risk if you do not keep up with the repayments" which only applies to debts secured against your home. A mortgage is just one example of a secured debt - it prevents you from selling your home without paying back what is owed and the lender can force the sale of your property if you fall behind with repayments.
However, there is one way that a creditor can turn an unsecured loan into a secured one and it's by using a charging order. Be warned that creditors are increasingly using these as a means of getting their money back if you default on a loan!
A charging order is an order from the court placed on a debtor's property (house or land) for monies owed to a lender.
If you have borrowed money and the money is not secured and you have not kept to the repayment arrangement, a lender can request the court to place a charging order on your property so that when the property is sold you will have to pay that debt off first before any of the proceeds are given to you.
In basic terms, the unsecured debt becomes secured on your property.
Charging orders are governed by the Charging Order Act 1979. The High Court can only make a charging order where the judgement is a High Court judgement for more than £5,000, but the county court has jurisdiction in all cases.
