Selling Your House When You Have Debt

Debt and property sales intersect in more ways than most sellers realise. Some debts are secured against your home as registered charges and must be cleared before the buyer can take ownership. Others — such as credit cards or unsecured personal loans — do not attach to your property and have no legal effect on the sale itself. Understanding which category your debts fall into is the first step to working out how your sale will proceed.

This guide covers the full picture: how secured debts are handled at completion, what happens if you have a CCJ or charging order, the rules around selling during an IVA, and what bankruptcy means for your property. It also explains the completion statement mechanics that determine who gets paid what from your sale proceeds, and what to do if the numbers do not add up.

Secured versus unsecured debt: the fundamental distinction

Not all debt is equal when it comes to selling a property. The critical question is whether a debt is secured against your home or unsecured.

A secured debt is one where a creditor holds a registered charge over your property at HM Land Registry. This gives them a legal interest in the property and the right to be repaid from the proceeds when it is sold. Common examples of secured debts include:

• Your main residential mortgage (first charge)
• Second charge mortgages and secured personal loans
• Help to Buy equity loans
• Charging orders obtained following a CCJ
• Loans secured by family members against your property

An unsecured debt — such as a credit card balance, unsecured personal loan, overdraft, or utility arrears — does not attach to your property. It does not appear on your title register and has no direct legal bearing on your ability to sell. Creditors holding unsecured debts cannot prevent your sale or demand payment from the proceeds unless they first take legal action to convert the debt into a secured charge.

The practical implication is straightforward: secured debts must be dealt with before completion; unsecured debts do not. That said, serious unsecured debts — particularly those being pursued in court — can become secured debts if a creditor obtains a charging order, so timing matters.

Second charges: what they are and how they are repaid

A second charge is any charge registered against your property that sits behind your main mortgage in the order of priority. The term covers several different types of borrowing:

• Second charge mortgages: Loans from specialist lenders secured on the equity in your property, often used for home improvements or debt consolidation.
• Secured personal loans: Loans from banks or finance companies secured against your property rather than on your general creditworthiness.
• Help to Buy equity loans: The government's Help to Buy scheme registers a second charge. The redemption figure is based on a percentage of the current market value (typically 20% in England, 40% in London) rather than the original loan amount, so if your property has increased in value, you will owe more than you originally borrowed.
• Family secured loans: Informal arrangements where a family member lent money secured on your property and registered the charge at Land Registry.

When you sell, your solicitor will identify all charges on your title and request a redemption figure from every charge holder. The charges are paid in strict priority order on completion day: the first charge holder receives their full redemption amount first, then the second charge holder receives what remains, and so on down the priority ladder.

For a detailed walkthrough of how second charges interact with the sale process, see our guide on selling with a second charge.

CCJs and charging orders: how court debts become secured

A County Court Judgment (CCJ) is issued by a court when you owe money to a creditor and fail to pay. In itself, a CCJ does not automatically attach to your property — it is a judgment recording that you owe a debt, but it is not yet a charge.

The next step a creditor can take is to apply to the court for a charging order under the Charging Orders Act 1979. If granted, the charging order is registered at HM Land Registry and converts the unsecured CCJ debt into a secured charge against your property. From that point, the creditor has the same rights as any other charge holder: they must be paid at completion, and they can block the sale if the proceeds are insufficient to repay them.

How to check whether you have a charging order

You can download your official title register from HM Land Registry for £3 per document. The charges register section will list all charges, including charging orders. Your solicitor will also carry out this check as part of standard conveyancing due diligence.

If a charging order has been registered, your solicitor will contact the creditor to obtain a redemption figure. This will include the original judgment debt plus any interest that has accrued since the date of the order. The full amount must be paid at completion before the buyer can receive a clean title.

Interim charging orders and the sale timetable

Courts can grant interim charging orders while an application is being considered. An interim order can be registered at Land Registry and may appear during the conveyancing process even if the final order has not been made. If a creditor is actively pursuing a charging order while you are in the process of selling, it is important to resolve it before exchange of contracts. Once contracts are exchanged, you are legally committed to completing on a specific date, and any last-minute charging order registered after exchange could complicate matters significantly.

Individual Voluntary Arrangements (IVAs) and selling

An Individual Voluntary Arrangement (IVA) is a formal insolvency procedure governed by the Insolvency Act 1986. You enter into a legally binding agreement with your creditors, supervised by a licensed Insolvency Practitioner (IP), to repay a portion of your debts over a fixed period — typically five or six years.

If you own a property when you enter an IVA, most standard IVA terms include a clause requiring you to take steps to release equity from your property after a certain number of years (commonly year three or four of the arrangement). Selling the property is one way to meet this requirement.

What you need to do before selling

• Obtain your IP's consent. You cannot sell your property during an IVA without the express written consent of your Insolvency Practitioner. Your IP acts as supervisor of the arrangement and has a duty to your creditors.
• Understand how the proceeds will be distributed. The equity released from the sale will typically be paid into the IVA fund. After secured debts (your mortgage and any other charges) are paid, the net equity goes to the IVA supervisor for distribution to creditors. You will not receive the balance as you would in a normal sale.
• Confirm whether the sale satisfies the IVA. Depending on the terms of your IVA and the amount of equity released, the sale may bring the arrangement to an early conclusion. Your IP can advise on this.

The Insolvency Service publishes guidance on IVAs and your obligations under them. StepChange also offers free, independent advice on IVAs and what selling a property during one means for your financial position.

Bankruptcy and your property

Bankruptcy is the most serious form of personal insolvency. When a bankruptcy order is made, your property automatically vests in either the Official Receiver or, if appointed, a Trustee in Bankruptcy. From that moment, you no longer have legal ownership of the property and cannot sell it yourself.

What the trustee can do

The trustee has broad powers to deal with your property for the benefit of creditors. They can:

• Sell the property outright on the open market and distribute the proceeds to creditors after paying secured debts and costs.
• Apply to the court for an order for sale if a co-owner (such as a spouse or partner) refuses to cooperate.
• Register a restriction at HM Land Registry preventing any disposal of the property without the trustee's consent.

The three-year rule

Under the Insolvency Act 1986, the trustee has three years from the date of the bankruptcy order to deal with your interest in your home. If the trustee takes no action within that period, your interest in the property reverts to you automatically. This is often the outcome where the property has little or no equity, making a sale uneconomical.

If you are facing bankruptcy and own a property, it is critical to seek specialist advice from a solicitor or an organisation such as Citizens Advice before the bankruptcy order is made. There may be options to negotiate with creditors, enter an IVA, or deal with the property before bankruptcy is declared that preserve more of your financial position.

Negative equity: when the proceeds fall short

If the total of all secured debts registered against your property exceeds the sale price, you are in negative equity across your secured obligations. This is a different situation from having unsecured debts that exceed your savings — it means the property itself is worth less than what you owe against it.

For a full analysis of your options, see our guide on selling with negative equity. In brief, your main options are:

• Cover the shortfall from savings. If the gap is manageable, you can pay the difference on completion day. Your solicitor must know about this in advance.
• Negotiate a shortfall agreement with your lender. Some mortgage lenders will agree to release their charge and accept less than the full redemption amount, converting the shortfall into an unsecured loan repayable over time.
• Wait for property values to recover. If you are not under immediate financial pressure, holding the property may be the least costly option.
• Seek debt advice. StepChange and Citizens Advice offer free, independent advice on debt options including those involving property.

How debts are handled on the completion statement

Your solicitor prepares a completion statement before completion day. This document lists every deduction from the sale price and confirms how much you will receive after all charges, fees, and costs are cleared.

The following table illustrates how multiple charges and debts might appear on a completion statement for a seller with a main mortgage, a second charge, and a charging order:

In this example, secured debts alone account for £231,450 of the £310,000 sale price. Understanding these figures before you accept an offer is essential. Our guide on the hidden costs of selling a house covers all the deductions a seller should account for when working out their net proceeds.

Practical steps: what to do before you list

If you have debts and are planning to sell, the following steps will help you prepare and avoid problems during conveyancing:

1. Download your title register. Go to HM Land Registry and download your official title register for £3. Check the charges register section for every charge listed against your property, including any you may have forgotten or that were registered without your full understanding.
2. Request redemption figures for every charge. Contact each charge holder and request a formal redemption figure valid for your anticipated completion date. Add these figures together to calculate your total secured debt.
3. Calculate your net proceeds. Subtract the total of all redemption figures, estate agent fees, and solicitor costs from your expected sale price. If the result is negative, you need to take advice before proceeding. If it is positive, you have a clear picture of what you will receive.
4. Check for CCJs and charging order risk. If you have any unpaid CCJs, a creditor could apply for a charging order while your sale is in progress. Consider settling outstanding CCJs before or during the marketing period to eliminate this risk.
5. Speak to your IP if you are in an IVA. Contact your Insolvency Practitioner before taking any steps to sell. They need to be involved from the outset and their consent is mandatory.
6. Instruct a solicitor who understands debt scenarios. Not all residential conveyancing solicitors deal regularly with charging orders, IVA sales, or multiple charge redemptions. Look for a solicitor with experience of these situations. The Law Society's Find a Solicitor tool allows you to search by specialism.
7. Front-load your legal preparation. While you are resolving debt questions, you can complete your property information forms, gather title documents, and order property searches. This parallel preparation means you are ready to proceed quickly once the debt position is clear. See our guide on how to sell your house fast for more on front-loading legal work.

How Pine helps sellers in complex situations

Selling with debts often means more conveyancing complexity and more time pressure. Pine helps sellers complete their legal preparation — TA6 and TA10 property information forms, property searches, and title document organisation — before a buyer is found, so that when an offer is accepted, you are immediately ready for conveyancing to begin. For sellers navigating charging orders, second charges, or IVA constraints, reducing the time between offer and completion is especially important, because delays cost money in accruing interest and can increase the risk of a creditor taking further action.

Sources and further reading

• Charging Orders (StepChange)
• Individual Voluntary Arrangements (StepChange)
• Charging Order on Your Home (Citizens Advice)
• How Bankruptcy Affects Property (Citizens Advice)
• Bankruptcy: Overview (GOV.UK)
• Individual Voluntary Arrangements (GOV.UK)
• Land Registration and Charges (The Law Society)
• The Insolvency Service (GOV.UK)

Related guides

• Selling a House After Bankruptcy

Frequently asked questions