When seeking to recover money from an opponent via litigation it is important to remember that obtaining judgment is a very significant step towards this aim but not an end in itself. A judgment from the court is no more than a piece of paper to be framed for posterity unless it is possible to take the next step and actually enforce it and recover money.
Assuming your judgment has been properly served on the debtor and the time for payment has elapsed, you can then use any method available to enforce. In fact, certain methods you can use simultaneously or one after the other. The trick is to gauge which is most appropriate in any given case by relying on information you have about the creditor.
The following main methods can be used:
A charging order can secure a judgment debt by placing a charge on a judgment debtor’s beneficial interest in land or securities. This prevents the judgment debtor from selling the land without paying you what is owed, provided that there is enough equity after payment of earlier creditors.
An application for a charging order requires the court to exercise discretion and it will be looking to see whether enforcement by this method is proportionate. For instance, the court may not choose to secure a small judgment (e.g. £100), when this could be enforced by another method. A charging order is most effective when there is a good amount of equity in a property and the judgment debtor is the sole owner.
Obtaining a charging order can be slow, and the order itself does not produce funds to satisfy your judgment debt. Instead, you are required to await sale of the relevant property, which does not occur as a result of a charging order. You may subsequently apply for an order for sale of the property, sit back and await its sale in due course, or await an order obtained by other creditors.
Third party debt order
Where a trade creditor owes monies to a judgment debtor (who owes you money pursuant to a court order) and you become knowledgeable of this fact then you can apply to the court for an order that the amount owed to you that is in the hands of the third party, such as a bank, is frozen and paid to you. Third party debt orders obviously depend on there being a third party debt that is known about by you and for this reason they are not the most popular method. As noted earlier, the more information you can obtain about the judgment debtor, the better.
Attachment of earnings
An attachment of earnings order provides that a proportion of a judgment debtor’s earnings is deducted by his employer and paid to you until the judgment debt is paid. The amount deducted follows set rates applied to the judgment debtor’s resources. It is only available against individuals and in the county court, although a judgment can be transferred from the High Court to a county court for the purposes of obtaining an order. This is a popular method of enforcement, which is inexpensive and fairly easy to do. Automatic deduction from wages means that you do not have to rely on the debtor making payment. However, it depends on the judgment debtor being in employment and it can take a long time to pay off a large judgment debt by this method.
Execution of goods, warrant of execution and writ of fieri facias
Execution against goods is a very popular method of enforcing a judgment debt and can be done quickly. It requires the issue of a court document (in the High Court, a writ of fieri facias; in the county court, a warrant of execution), which authorises an enforcement officer to seize and sell a judgment debtor’s goods (provided they are not exempt) and raise funds to satisfy your judgment debt. When considering this method you should try and find out as much as possible about what goods are owned by the judgment creditor. Insolvency proceedings: bankruptcy and company liquidation
Where the amount you are owed by an individual judgment debtor exceeds £750 you can apply to make him bankrupt. In the case of a company, you can also apply for it to be wound up. This action typically commences with service of a statutory demand, which is very straightforward. Sometimes this simple first step results in payment without further action.
Following a bankruptcy or winding up order the judgment debtor’s assets will be collected in by a trustee in bankruptcy or liquidator and distributed among all the creditors. There are different ranks of creditors as an unsecured creditor you will rank below others, meaning you may only recover a proportion of what is left over. This procedure is often expensive and time consuming, and may not ultimately lead to any recovery.
The threat of insolvency can sometimes lead to judgment debtors making payment, but the courts discourage use as a debt collection exercise. The courts can dismiss petitions and also penalise you in costs if the debt is genuinely disputed or if the judgment debtor has a genuine counter claim against you.
For more information on how to enforce a money judgement call us on 0151 735 1000 and speak to one of our debt recovery solicitors.
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