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Enforcing judgment debts

09 November 2010

When a judgment has been obtained against a debtor and you wish to enforce it, the first task is to choose the most appropriate method. This will largely depend on the value of the debt but also on what information you have about the debtor, such as his finances, employment status, assets and liabilities.

If little or no information is known about the debtor’s assets or liabilities, an application can be made that he must attend court to answer specific questions about his assets and liabilities or finances. This is not in itself a method of enforcement, but if the debt is substantial, it is worth doing so that an informed decision can be made about which method of enforcement will be most effective.

High Court writ

  • The most popular and probably most widely-used method of enforcement is to issue a Writ in the High Court for enforcement by a High Court Enforcement Officer (HCEO).
  • This method can only be used for debts over £600 and works well in situations where an individual or company has substantial assets. The HCEO will attend the company’s trading address (or home address in the case of an individual debtor) to make contact with them. The HCEO will usually take what is known as ‘walking possession’ of goods owned by the debtor. This means that the goods stay with the debtor until the HCEO returns a few days later to remove them. This often prompts the debtor to make swift payment to the officer because no one wants to have their stock, goods or possessions removed to be sold.
  • In practice, is rare for the HCEO to remove goods and sell them at auction because the value must cover the cost of removal and sale, the HCEO’s fees (which will have been added to the debt) as well as payment of the debt to the creditor. Nevertheless we find this method to be extremely effective and it comes at low cost to the creditor.

Third party debt order

  • Applications to court for a Third Party Debt Order are another quick and effective way to recover debts. This method can be used where the debtor is owed money by a third party, (including banks and building societies). The application is made without the debtor’s knowledge and once the interim order is made, it will be served on his bank. The effect is that the bank must search for any other accounts held by the debtor and freeze all funds held in them as of that day, up to the value of the judgment debt. A hearing is then held for the court to decide if the interim order should be made final, in which case the bank must pay funds direct to the creditor.
  • Third party debt orders are not widely used, but if bank account details are known and it is also known that the debtor is likely to have money in his accounts—or is expecting money to be paid in on a certain day—the application can be timed for maximum recovery.

Attachment of earnings

  • If the debtor’s employer is known, a cost effective way to recover a debt owed to you is to apply to the court for an attachment of earnings order. This means that the debtor’s employer will be required to take a certain amount from his wage each month and make monthly payments to you, as the creditor. Although this remedy is useful in some circumstances, unlike the methods described above, interest will not accrue on the debt from the date the order is made. Also, if the debt is a large one, it can take some time to recover it in full.
  • Other enforcement methods to consider include enforcement by way of the county court bailiff (for debts under £600), charging order applications and orders for sale of property and winding up or bankruptcy petitions.

 

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Nick Cox LLB (Hons)
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