You have a judgment against your debtor, whether that be in default or obtained at a hearing, but payment has still not been made. What steps can you take next?
All money judgments issued by the court are enforceable if a debtor fails to make payments as ordered. The courts offer a number of different options for enforcing your judgment, but which will be best for your case will depend on the circumstances.
Below is a brief outline of each option, but you should always seek expert legal advice before embarking on enforcement action. Contact our team of debt recovery solicitors at 0800 2800 421, or submit a quick contact form to arrange a callback.
Taking control of goods
If your debtor has assets that can be seized and sold at auction, obtaining a writ or warrant of control may be the best way to secure payment of your judgment.
A writ of control is issued by the High Court and executed by High Court Enforcement Officers (“HCEO”). Your judgment debt must be over £600 and cannot be a debt that was regulated by the Consumer Credit Act 1974.
County Court Bailiffs will execute a warrant of control for debts up to £5,000, unless the debt arises from an agreement that was regulated by the Consumer Credit Act 1974.
The removal of goods by way of writ or warrant of Control is highly regulated, but at its basic the relevant enforcement officer will remove assets belonging to the debtor, such as cars, TV’s etc, to sell at auction and use the proceeds to settle your debt. The debtor can of course avoid such action if they pay the debt and enforcement costs to the enforcement officer.
Third party debt order
Do you have you debtor’s bank account details? Are you aware that they have a large balance in that account, or are they expecting regular monthly payments?
If the answer to either of the above is yes, it may be worth applying to the court for a third party debt order. Such an order will compel a third party that owes your debtor money to pay those funds directly to you instead.
The advantage of a third party debt order is the element of surprise. Once an interim order has been obtained the creditor serves it on the debtor’s bank, who in turn freeze the bank account before the debtor is aware that the interim order has been issued. Any money in the account at this time cannot be withdrawn and the court can order that those funds be paid to you.
On the other hand, the disadvantage of this method is that it can be somewhat of a gamble. Any money received after the interim order will not be subjected to the freeze. This means it is all a matter of timing to ensure that there is money in account at the time of the interim order.
Attachment of earnings
Attachment of earnings order are similar to third party debt orders, save that the debtor’s employer is ordered to make regular monthly/weekly deductions from the debtor’s wages rather than a one off payment.
There are limits to the amount that can be taken from the debtor’s salary, but provided your debtor is working full-time and is earning a relatively decent salary the monthly contributions should at least start clearing the debt.
In some cases the debtor may reply and offer a repayment directly to avoid their employer hearing about their debt. If the debtor was to default on any agreed repayments, the court could then go directly to the employer. Equally, if the debtor does not respond the court will approach the employer directly.
One disadvantage to an attachment of earnings order is that it may prompt the debtor to leave their job. A creditor can, however, always apply for subsequent orders once the new employment details have been established.
If your debtor owns residential or commercial property, you could look to secure your judgment debt by way of charging order.
A charge over the debtor’s property can either give the creditor’s interest priority against subsequent transactions i.e. the judgment debt has to be settled out of the sale proceeds before the difference is distributed to the debtor, or it may require the debtor to give notice of the sale within a prescribed time limit or prevent them from selling without given prior notice to the creditor.
Ultimately a charging order can lead to an order from the court that the property be sold.
This method of enforcement can be slow and should be seen more as a method of security. The effectiveness of a charging order can also be weakened if the debtor is a joint owner.
Orders to obtain information from a judgment debtor is not a method of enforcement that generally results in direct payment, but rather it is a useful tool that can be used to determine which other method of enforcement can be used.
When a debtor is ordered to attend court, they will be required to provide information about their income and assets. A creditor can then use this information to decide on their next steps.
One advantage of this tool is the threat of being found in contempt of court if the debtor fails to attend court when ordered. The fear of attending court to answer questions under oath may also prompt the debtor to put forward an offer of repayment.
Compulsory insolvency proceedings can be instigated off the back of a judgment. This is, however, a complex and sometimes costly process that may not result in recovery if the debtor is truly insolvent. As such, expert advice should always be sought from an experienced debt recovery solicitor before embarking on this process. Call our team today on 0800 2800 421.