You might think that after you have gone to court and obtained judgment against your debtor, the debt will be repaid in full and that will be the end of it. Unfortunately, this is often not the case, even though there is a considerable incentive for the debtor to pay the debt in full within 28 days of the judgment. If the payment is made within that time period, the entry on the Register of County Court Judgments can be removed. Being listed on the Register can make it extremely difficult for the debtor to obtain credit in future.
There are numerous methods by which you can enforce a judgment and it is possible to use more than one method, either consecutively or at the same time. However, enforcing a debt does incur costs, so it is important to determine which methods of enforcement are likely to be successful before taking any action.
Find Out More About Your Debtor
If you run a business, your credit policy may mean that you already possess a considerable amount of information about your judgment debtor’s financial circumstances. This may be sufficient to enable you to decide on the best method of enforcing judgment. If, on the other hand, you need more information before you are able to make this decision, you can apply to the court for an Order to Obtain Information.
This is a process by which a judgment debtor comes to court to answer standard questions about their financial circumstances. It can be used for both individuals and businesses. Aside from the documents specified in the order, you can ask that the court officer asks the judgment debtor specific questions or produces particular documents. You can obtain this type of order to find out more information about individuals or companies.
Warrant of Execution
This method of enforcement involves a County Court Bailiff or High Court Enforcement Officer writing a letter to the judgment debtor giving them seven days to pay the debt in full. If they still fail to pay, the enforcer will attend the judgment debtor’s home or place of business and either collect money or seize goods in order to sell them at auction to settle the debt.
A warrant of execution only works if the judgment debtor has property worth seizing in addition to essential household items and items they need for work (e.g. tools), as these are exempt from seizure. Before embarking on this method of enforcement, it is worth investigating what the judgment debtor owns in terms of property that is capable of being seized and sold.
Attachment of Earnings
If your judgment debtor is an employed individual (except for Armed Forces personnel, who are subject to different rules) it is possible to arrange to have payments deducted directly from their wages or salary. The court will make an assessment as to how much the judgment debtor can afford and payments will be made via the Centralised Attachment of Earnings Payment System (CAPS), which produces enforcement orders and monitors and processes payments from employers. If payments stop, CAPS will contact the employer to find out why. Where enforcement becomes necessary, CAPS will refer the order back to the local court.
Often a judgment debtor does not want his or her employer to know about the judgment and will try to negotiate a payment plan directly with the judgment creditor to avoid this embarrassment. However, it is worth noting that an attachment of earnings order will stop in the event that the debtor leaves their job or becomes self-employed or unemployed. The order may, however, be reissued if they find new employment.
Third Party Debt Orders
When a judgment debtor is owed money by a third party, it is possible to obtain an order that freezes the money in an account so as to prevent it from being paid by the third party to the judgment debtor and requires it to be paid to the creditor.
Being sure of the facts and timing are very important in relation to this type of order as money is frozen on the day the order is received. The judgment debtor may try to dispute the order and there are obvious problems if the third party does not owe the debtor any money. If the debtor is an individual, he or she may contest the order on the basis of hardship.
Charging Orders
A charging order can be placed on your judgment debtor’s property. This might be on their home, other real estate, money paid into court, or on stocks and shares. Rather like a charge that a mortgage company or bank places on a house, a charging order means that when the property is sold, you will receive your money back (unless there is insufficient equity to pay you the value of the order).
Before choosing this method of enforcement, it is important to consider whether or not your judgment debtor has sufficient equity in the property once any mortgage or other charges in priority are taken into consideration. It should also be noted that obtaining a charging order does not compel the judgment debtor to sell the property, although this may be possible in certain circumstances.
Enforcement action can be complex. If you have any questions on how to enforce a debt against an individual or business, we can advise you.