Before you may enforce a judgment using the enforcement methods, the judgment debtor must have been given an opportunity to pay the judgment debt.
As such, the judgment debtor must have failed to pay the judgment debt when due or failed to pay an instalment due under the terms of the judgment. Careful consideration should, therefore, be given to whether the payment is overdue under a judgment before any enforcement action is commenced.
Time for payment of judgment debt
A judgment takes effect from the date on when it is given or made or a later date that is specified by the Court. Under the Civil Procedure Rules, if a judgment or order for the payment of money does not specify a particular time for payment, the general rule is that the judgment debtor has 14 days from the date of the judgment in which to make payment.
Methods of Enforcement
There are a variety of enforcement methods available to a creditor and they may select which enforcement method to proceed dependent upon the circumstances of the judgment debtor. For example, if a debtor has assets such as property but no liquid funds, you would select an enforcement option that applied to enforcement against assets and vice versa. We have summarised below the most popular enforcement options available to you.
Order to obtain information from a judgment debtor
The key question to ask before commencing the enforcement of a judgment debt is whether it is worth enforcing. If the judgment debtor does not have any assets or income against which the judgment debt can be enforced, it will prevent the enforcement of the debt irrespective of any enforcement order obtained.
In order to alleviate the problem of calculating the merits of whether to enforce or not, you may make an application that will require the judgment debtor to give answers as to their assets, income, expenses and liabilities orally on oath to a court officer. Failure to comply by the judgment debtor will result in the matter being referred to a judge who may make a committal order against the judgment debtor, committing them to prison for a period of time. The answers to the questions should enable a creditor to make an informed decision as to whether to proceed to enforce and if so, what enforcement method would be the most effective based upon the circumstances of the judgment debtor in question.
Taking control of goods using writs and warrants of control
This is a popular method of enforcing a judgment as it can usually be done quite quickly. The enforcement requires the issue of a court document (writ of control/warrant of control dependent upon the level of Court), which commands an enforcement officer to take control of and sell a judgment debtor’s goods in order to raise funds to satisfy a judgment debt.
Please be aware that there are items belonging to the judgment debtor that are exempted from being taken by the enforcement officer and items belonging to third parties may also not be taken. This method of enforcement is only effective if the judgment debtor has goods of sufficient value.
Third party debt order
Where sums owed to a judgment debtor are in the hands of a third party, such as a bank, those sums are frozen for the benefit of the judgment creditor. Third party debt orders are not the most popular of enforcement methods as they are reliant upon there being a third party debt, such as where a judgment creditor is aware of a judgment debtor’s salary being paid into a certain bank account.
Attachment of earnings
Under an attachments of earnings order, a proportion of the judgment debtor’s earnings are deducted by their employer and paid to the judgment creditor until the judgment debt has been paid in full. The amount that is deducted is guided by set rates that are applied to the judgment debtor’s resources.
This method is only available against individuals and is a popular method of enforcement due to it being inexpensive. In addition to this, the automatic deduction from the wages by the employer means that a judgment creditor does not have to rely on the judgment debtor to make the payment, which reduces the risk of the judgment debtor defaulting on payments. This method does, however, rely upon the judgment debtor being in employment and it can take a long time for a large judgment debt to be repaid by this method, particularly if the judgment debtor is on a low income.
A charging order secures a judgment debt by imposing a charge over a judgment debtor’s beneficial interest in land, securities or certain other assets. This will require to pay the judgment creditor the judgment debt amount once the asset is sold, provided that there is sufficient equity after the payment of prior creditors. This method of enforcement calls for the court to exercise its discretion and it will look to see that the enforcement by a charging order is proportionate. As such, a court may not choose to secure a small judgment debt, such as £100.00, by way of charging order against a property as there would be more suitable enforcement methods for such a judgment debt.
The process for obtaining a charging order can be slow and once a charging order has been obtained, the order itself does not realise the funds to satisfy the judgment debt. The satisfaction of the judgment debt would require the sale of the asset, which does not automatically stem from the charging order. The judgment creditor in this situation must then apply for an order for sale, await the sale of the asset by the owners in due course, or following an order for sale obtained by other creditors.
Insolvency proceedings: individual bankruptcy and company liquidation
After the 1st October 2015, where an individual owes a judgment creditor £5,000.00 or more, they may apply to make the individual bankrupt. Where a company owes a judgment creditor £750.00 or more, the judgment creditor may apply for that company to be wound up.
After a bankruptcy or winding-up order is made, the judgment debtor’s assets will be collected in by a trustee in bankruptcy or liquidation and distributed among all the creditors in accordance with insolvency law.
This method of enforcement can be both time consuming and expensive in addition to the risk that it may not lead to any recovery. The threat of insolvency proceedings can sometimes encourage a judgment debtor to make payment. However, the Courts discourage the use of insolvency procedures as a debt collection exercise. In addition to this, the Courts can dismiss petitions and penalise judgment creditors in costs if the debt is genuinely disputed or if the judgment debtor has a genuine cross-claim or right of set off. There are therefore a number of considerations and risks to be taken by a judgment creditor before proceeding with this method.
How we can help
T G Baynes have an experienced debt recovery department and civil litigation department that have dealt with a number of cases within each of the above enforcement methods. Our firm is, therefore, able to advise as to the best course of action in each particular case and run the enforcement proceedings on your behalf so as to assist you in recovering a judgment debt.
If you have a judgment debt that you wish to enforce, or a debt that you wish to obtain a judgment for and ultimately enforce, please do not hesitate to contact us.