A judgment will affect the debtor’s credit rating, remain on the public record for 6 years (unless the debtor pays the Judgment sum within 28 days) and enable you to immediately enforce the debt.
There are a number of enforcement options available which include:
- Writ / Warrant of Execution – Seizing and selling the debtor’s moveable property
- Third Party Debt Order – Get a debt due to the debtor paid to you instead
- Charging Order – Take a charge over the debtor’s home, office or property
- Attachment of Earnings Order – Have the debt paid directly out of the debtor’s earnings
- Commence Insolvency proceedings
Can the debtor pay?
Before incurring the cost of enforcement you may wish to check the debtor’s financial position again, as far as you can. This may involve obtaining a credit report.
Writ/Warrant of Execution
The most common initial method of enforcement. For a reasonable sum you pay for either a bailiff or high court enforcement officer (HCEO) to attend the debtors premises to collect the debt, or take steps to enforce payment by seizing and selling goods, or providing a report as to the debtor’s position.
To assist the HCEO/Bailiff we would ask that you provide us/them with all the information you have about the debtor’s whereabouts, contact details and movable good/property.
This would include any addresses and also telephone numbers, mobile numbers, details of vehicles etc. For example, if you know that the debtor keeps valuable equipment or vehicles at different locations, let us know what they are and where they are.
What can be taken?
Most moveable items belonging to the debtor can be taken including any money, banknotes, bills of exchange, promissory notes, bonds, specialties or securities for money belonging to the debtor.
The items seized must generally be sold by auction. Items may only be sold privately with the court’s permission. This will normally only be given where the goods are of a specialised nature or would be of special value to e.g. the debtor’s colleagues or family.
What can’t be taken?
Essentially the basic items to enable the debtor to live and work cannot be taken. These are defined as: –
- Such tools, books, vehicles and other items of equipment as are necessary to the debtor for use personally by him in his employment, business or vocation;
- Such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the execution debtor and his family.
Who will enforce the Judgment?
The county court bailiff can enforce judgments for less than £600.
The HCEO enforces judgments for more than £5000.
Judgments between £600 and £5000 can be enforced by either the HCEO or the bailiff.
The HCEO is generally more effective in enforcing a Judgment and recovering the sums due to you.
Can you force entry?
Entry can be forced into commercial premises only, for example by employing a locksmith to pick the lock. Entry cannot be forced into residential premises.
What if the debtor does not own the goods or someone else claims ownership?
A writ/warrant of execution can only be enforced against goods or property that the debtor personally owns. Someone other than the debtor may claim that the goods belong to them.
If you feel the claim is dubious (e.g. because it is from a relative or friend of the debtor), and if the goods are sufficiently valuable it is often worth contesting ownership and continuing with the matter as far as the first hearing for directions.
If you do not accept the claim, the HCEO will make an application for the court to decide who owns the goods. There will be an initial appointment at which the court will give directions for the claimant to file an affidavit setting out the evidence supporting the claim and for you to file an affidavit in reply to this. After that the court will give directions for a hearing date at which the court will decide the dispute. The hearing will be in the HCEO’s local court. If the claimant does prove ownership, you will be responsible for the claimant’s costs and the HCEO’s costs as well as your own. The cost of going this far will depend on what evidence is put in and we can give you an estimate once we have seen the evidence.
Often the claimant will either fail to attend this hearing, or fail to put in evidence their alleged ownership, in which case the claim will be struck out. In this case the costs of the HCEO will be payable by you in the first instance, but you would be entitled to recover them and your own costs from the claimant.
If you decide to accept the claim once you have seen the evidence, you will have to pay the HCEO’s costs and may have to pay the claimant’s costs as well. Although it is sometimes possible to negotiate a settlement by which you withdraw your opposition to the claim without paying the claimant’s costs, this is not always possible.
Do not deal with the debtor directly
It is important that you do not make any deals direct with the debtor once the HCEO / bailiff has been instructed. If you do, and you forget the HCEO’s / bailiffs charges, you will have to pay them.
What does it all cost?
The costs of instructing HCEO/bailiff are partly recoverable from the debtor if the HCEO/bailiff collects in full. If he does not they are payable by you.
Abortive costs – if the bailiff is unsuccessful he makes no further charge. If the HCEO is unsuccessful he will make a charge for the abortive attempt to execute.
Costs of seizing and selling – There may be costs of forced entry into premises, removal and storage costs and costs of sale. Apart from the expense actually incurred (e.g. for removing goods), the HCEO is entitled to commission of between 2.5% and 12.5% depending on the stage reached.
A Third Party Debt Order
Where your debtor is owed money by a third party, the Courts have the power to Order that third party to pay the money direct to you, rather than to your debtor.
For example, the debtor may have a deposit account with a bank or building society. You only need to have evidence that the debtor has an account with that bank; you don’t need to know the account number or even the branch, although the more information you have the better.
The order only affects accounts in the sole name of the debtor and cannot be used for accounts held jointly with someone else. A third party debt order is only worthwhile if there is actually money in the account.
A third party debt order can also be used against debts due to the debtor.
Charging Order
Where a debtor owns property e.g. a house, it is possible to have the Judgment secured by a charging order on the property. This gives you similar rights to those of a mortgagee. Once you have got the order you can then apply, through a separate action, for the sale of that property. However, an order for sale is rare.
The procedure
Obtaining a charging order is a two-stage procedure. Firstly, an application on paper and without notice to the debtor. The Court will then grant an Interim Charging Order and set a date to consider the case again. The charge is then registered and HM Land Registry and the debtor are told about the Interim Charge. At the subsequent hearing the Court may grant a Final Charging Order. This again should be registered with HM Land Registry.
What can you get a charge against?
You can get a charge on the debtor’s interest in the following ‘property’: –
- Land;
- Government stock;
- Stock of any body (other than a building society) incorporated within England and Wales;
- Stock registered in a register kept within England and Wales even though the body is incorporated outside England and Wales;
- Unit trusts;
- Funds in Court;
- Any interest under a trust.
Is it worth it?
It is usually only worth getting a charge on a property if there is equity in it i.e. it is worth more than has already been borrowed.
Where land is registered at HM Land Registry we can obtain a copy of the title and see what charges are already registered. However, the title does not show how much has been borrowed or what the property is worth now.
You can however take further advice on the value of the property. You can also make an application for an information order to find out the amounts borrowed against the property.
Joint Ownership of a property
It may be that the debtor only has a share in the property e.g. where he owns a house jointly with his wife. The charge will then be on the debtor’s share of the property and not on the whole of the property, therefore the charge is less secure. A restriction is entered on the property’s title to say that notice must be given to the creditor before sale or further charge of the property occurs. It is up to the selling agent to then pay the sums due to you (if there is enough equity in the property) there are however ways and means of protecting your interest should this happen.
Enforce the Judgment by sale of the property
Once a charging order has been granted you can enforce it by making an application to sell the property. If an application is made the costs will depend on whether the application is opposed. Some creditors automatically apply for a charging order, rather than instruct the HCEO or bailiffs. You can find that debts are paid off reasonably quickly because the debtor does not like having the charge on the property.
Instalment orders
A debtor who cannot pay the amount due under the Judgment may apply for an instalment order. Providing an interim charging order has been obtained the court may make that order final.
There is now an agreed procedure with the Courts where the creditor can obtain a charging order and consent to the instalment order at the same time.
An Attachment of Earnings Order
This is often an appropriate method of enforcement where a debtor is working. You will need to know the name and address of the debtor’s employer. The debtor will be sent notice of your application because the Court requires a statement on the debtor’s earnings from them. The application can only be made in the debtor’s County Court.
Bankruptcy/Winding Up
This is the most expensive option but can sometimes be most effective.
The first step, in the case of an individual, is to serve a statutory demand on the debtor personally. If he does not pay, or dispute the debt, within 21 days a bankruptcy petition can be presented.
In the case of a company you can proceed straight to the winding up petition based on the unsatisfied (unpaid) Judgment. You can also present a winding up petition based on an undisputed debt without obtaining Judgment or serving a statutory demand. This is very quick and can be very effective.
Winding-up petitions presented against a company are advertised in the London Gazette. After advertising the petition, other creditors may become involved. If other creditors do become involved, and the debtor wants to settle the petition, it may have to satisfy them as well.
It is important to note that if the debtor makes payment after the date of issue of the petition and the creditor informs the Court that it does not wish to continue with the petition, another creditor may take over the petition. If a winding up order is then subsequently made on behalf of a supporting creditor, you would likely have to repay to the liquidator the money recovered. This is because the Winding up Order dates back to the date of presentation of the petition. This does not apply to payments made by a third party e.g. a director of the company.
The Court fee and receiver’s deposit for a bankruptcy petition are £820.00. The Court fee and receiver’s deposit for a winding up petition are £1220.00.
Register of county court judgments
Any Judgment entered against the Defendant is immediately registered at a central registry. If the Judgment is cleared within 28 days then the entry is removed. However, if the Judgment is paid after 28 days then the debt will be marked as satisfied, but the Judgment will remain on the register for a period of six years. This will reduce their ability to obtain credit. For the Judgment entry to be removed, or marked as satisfied, the debtor must forward proof of payment to the court together with a fee for removing or marking the entry. The fee is currently £10.00.