So, you have obtained a Judgment or Costs Order against the person or company who owes you money, which now concludes your matter…or does it? If the Judgment debt goes unpaid, what then?
This is a circumstance which can effect a range of legal issues. Whilst we hope that all Judgments and/or costs orders will be paid, this is not always the case and as such, it may be necessary to enforce the Judgment and/or a costs order against the debtor.
There are several questions to ask yourself before you commence a claim and also, again before commencing enforcement proceedings:
- Does the debtor have any assets in which to enforce against?
- How much will it cost to enforce the debt?
- Will these costs outweigh the Judgment debt itself, thereby making it disproportionate to pursue?
- Do you know where the debtor is, or can he/she be traced?
- Do you know if the debtor is employed?
- Do you have details of the debtor’s bank account?
- How long can you wait for the money?
If the Judgment debt is very low and the costs of enforcing the debt outweigh the return, there may be little point pursuing the enforcement. However, if it is worth pursuing, you should do so within six years of the date that the debt became enforceable (s.24 Limitation Act 1980). If you are outside of this limitation period, you need the Court’s permission to enforce.
There are several different methods of enforcement:
- Taking control of your debtor’s goods using writs and warrants of control (e.g. through High Court Enforcement Officers or Bailiffs)
- Third party debt orders (an order against a balance held in a bank account)
- Charging order (charge against debtor’s property)
- Attachment of earnings orders (order deducting payments from the debtor’s salary)
- Insolvency proceedings (bankruptcy or winding up petition)
You are entitled to use one or all of the enforcement methods, as you see fit.
The most widely used enforcement methods are charging orders and attachment of earnings orders. Insolvency proceedings are usually a last resort, although can be particularly powerful where, for example, a debtor has every intention of continuing to trade (if a company) or to avoid bankruptcy.
There are pros and cons to each method and not all methods will suit your needs. For example, if you are a company enforcing a debt and you want to get your money as soon as possible, you may not choose to seek a charging order over the debtor’s property as your charge will not be paid until the property is sold. If you are a landlord seeking to enforce a Judgment in respect of unpaid rent, an attachment of earnings order or writ of control is often more suitable. If you are aware that the debtor is self-employed, an attachment of earnings order will not be an option, however, you could seek a third party debt order or writ of control instead. It is always sensible to consider enforcement options before issuing a claim to avoid a pyrrhic victory.
It is also possible to enforce costs orders made in the Magistrates Courts. Costs orders issued in the Magistrates Court can be enforced as a civil debt (s.64(3) of the Magistrates Courts Act 1980), and therefore, all of the methods of enforcement mentioned above will be available in the same way as enforcing a Judgment debt.
If you are chasing unpaid invoices, you can consult our Debt Recovery Service for both advice and action.
If you require any assistance and/or advice in respect of enforcement proceedings, please get in touch with our Debt Recovery team at any of our offices.