Five enforcement options to settle an unsatisfied judgment debt

If you have obtained a county court judgement (CCJ) to settle a dispute or unpaid debt, and it remains unsatisfied, your next step as the judgement creditor is to consider the options to enforce the judgement.

Trainee solicitor Lucie Rushton, from WHN Solicitor’s dispute resolution team, outlines the enforcement process and offers five options for commencing enforcement to settle the judgement debt.

In order to be successful with enforcement, you need as much information as possible about the judgement debtor (i.e. the person that owes you money). Including any known addresses, contact telephone numbers, email addresses, date of birth, links to businesses and/or employment.

Prior to commencing enforcement, it is helpful to understand the judgement debtor’s financial circumstances. One option is to conduct an asset search, to ascertain whether they have anything of value.

If you choose to proceed and obtain an asset search report, an investigator will conduct various searches, including a bankruptcy check, search at the Land Registry to see if the judgement debtor owns properties and will consider if the judgement debtor has any associations with companies or employment.

Enforcement is not undertaken by the court through its own action. You, as the judgement creditor are required to make an application for any enforcement procedures to be carried out. You can consider the most appropriate mechanism of enforcement, with five options outlined below.

1. High Court enforcement

High Court enforcement is a popular method of enforcement. It involves enforcement officers seizing the judgement debtor’s assets to raise funds to satisfy a judgement debt. This method of enforcement can be executed quickly; however, it depends upon the judgement debtor having goods of sufficient value.

The fees incurred in connection with High Court enforcement are added to the debt and sought from the judgement debtor, together with any interest that has accrued. If a High Court Enforcement Officer is unable to recover the debt, they will usually charge a small abortive fee to you, as the judgement creditor.

2. Apply for a charging order

A charging order secures the judgement debt against property owned by the judgement debtor. The order prevents the property from being sold or transferred, without the judgement debt being discharged, in the first instance. Ultimately, a charging order is a deferred mechanism of enforcement and unless you force sale, you will likely have to sit on it until the property is sold.

You could consider making an application to force sale of the property, once you have the charge, however, proportionality should be borne in mind. The courts will often be reluctant to agree a forced sale if the judgement debt is of relatively modest value.

3. Attachment of earnings order

This involves applying to the court for an order that the judgement debtor’s employer pays a certain proportion of their wages to the judgement creditor. It can be an extremely useful tool to prompt payment, as often, a judgement debtor will not want their employer to be aware of the judgement against them.

4. Third party debt order

Put simply, a third party debt order, is an order that freezes money held by an individual, organisation or institution such as a bank or building society, which might otherwise be paid to the judgement debtor.

For example, Mr X (the judgement debtor) owes you money, but you are aware Mr Y owes Mr X money. A third party debt order can seek that Mr Y pays you money directly, to satisfy the judgement debt and any monies owed to Mr X.

In practice, we often see third party debt orders sought by head landlords, where the tenant owes money, and the property has been sub-let to a sub-tenant. The third party debt order will compel the sub-tenant (the third party), to pay rent directly to the head landlord (the judgement creditor), in order to discharge the judgement debt.

5. Winding up petition/bankruptcy

In circumstances where a company owes a debt, which exceeds £750 and is undisputed, the winding up procedure can be used.

The first step is to establish the grounds on which a winding up order can be made. It can be helpful to serve a statutory demand on the company, and allow three weeks for a response, before starting winding-up proceedings. This is because a company that fails to pay a statutory demand for a sum exceeding £750 is deemed unable to pay its debts.

This is one of the grounds on which a winding-up order may be made. In the alternative a non-statutory letter of demand can be sent. If the debt is not paid, the next step is to prepare and file the winding up petition at the court.

If the judgement debtor is an individual and the judgement debt exceeds the personal bankruptcy threshold of £5,000, it is open to you to petition for bankruptcy.

The bankruptcy route is suitable for undisputed debts. The courts do not look upon bankruptcy applications favourably in cases of disputed debts and claimants’ risk being penalised in costs. We can consider this as and when necessary.

If the judgement debtor does not make payment and is adjudged bankrupt, an official receiver will be appointed to take charge of their assets. The assets will be collected and sold to discharge the debts including you as a judgement creditor.

Lucie assists the senior team on client matters regarding commercial dispute resolution, long leasehold dispute resolution, commercial property disputes and debt recovery matters.

If you have a judgement debt which remains unsatisfied or, are considering the issue of proceedings to recover monies owed to you and would like to discuss the options, please do not hesitate to contact Lucie on 0161 761 8061, or by email: [email protected]