Top Tips for Enforcing Debts

You’re owed money by a debtor, and so far have dutifully complied with all the court procedures to obtain a judgment in your favour. However, after getting that judgment against your pesky debtor, you may feel no closer to recovering your money.

We have compiled some top tips to help you to enforce your judgment and get the money you are owed.  Our specialist lawyers are happy to help with any questions you might have.

First Things First

Before embarking on enforcement, as always the most important question remains: are you likely to recover anything from that debtor, and will the costs of trying to get the money outweigh the prospects of getting it back?

If a debtor has proven to be particularly tricky during proceedings, it’s likely this will continue when you’re enforcing. If the debt is substantial, it might be worth paying for enquiry agents to assess the debtor’s assets so you can decide what route to recovery to take. If the debt is small and the debtor is awkward, you may want to limit the time and money spent chasing the debt and go for the most straightforward recovery option.

If you do decide to move ahead with enforcement, you need to consider the debtor’s personal circumstances to assess the best enforcement option.

Does the debtor own property?

If so, you can apply to court to secure the amount of the judgment against the property as a charge. This is usually relatively straightforward, though can be complicated if the debtor jointly owns the property.

Once the charge is secured, you have to apply to the court to force a sale of the property, which is not easy – particularly if the debtor’s family resides in the property. There is also the risk that there might not be enough money in the property to pay your debt, particularly if the debtor has other mortgages or judgments secured against the property.

Is the debtor in employment?

If a debtor is working and you have details of the employer then you could seek an attachment of earnings order. This works in the same way as PAYE taxation, with payments towards the debt being taken before the debtor is paid by his employer and sent straight to you towards repayment of the debt.

This only applies to individual debtors, who are in regular paid employment. It is not always a quick route though; proceedings can be quite drawn out with the Court wanting to ask the debtor various questions about their circumstances, so much depends on if/how they answer.

Does the debtor have money in a bank account, or are they about to be sent money to an account in their name?

If you know that the debtor is going to receive money from a third party or has funds in a bank account, then you can apply for a third party debt order. This freezes the account of the debtor and the money being sent to the debtor is sent to you.

The timing of these orders is critical as the Court order will only freeze money on the day it is received from the third party.  You have to know when the money will be sent, and how much, for this to work. Alternatively, you have to be sure that there are sufficient funds in the debtors account to make the application worthwhile.

Does the debtor own any assets or moveable goods?

If the debtor has assets, you could instruct an enforcement officer, or bailiff, to seize goods. This can be a cheap, effective way of applying pressure on a debtor and often payments are made in full or a payment plan obtained.

Are insolvency proceedings your best option?

You can consider applying to Court for a winding up order in the case of a debt owed by a company, or a bankruptcy order in the case of an individual. You don’t need to have a judgment first to go down this route, but insolvency proceedings can be used to enforce judgments that go unpaid.

From 1 October 2015, the minimum debt thresholds for these options have increased to £5,000 for bankruptcy against individuals and £750 for winding up companies.

Trying to get debtors to pay can be a frustrating process. Debtors can be savvy and often know how to “work” the process and dodge demands for payment. The key is to know who you are dealing with at the outset, before deciding on the best options for enforcement. The more you know about the debtor, where they live, how they live, and how they operate, the better placed you will be to get your money back.

If you would like to discuss this article in further detail, please contact Sallyanne Phillips, on 01274 703925 or at sallyanne.phillips@gordonsllp.com