Debt Recovery: Options Explained
By Aaron Sambells, Senior Debt Recovery Specialist at Woodstock Legal Services
When a court judgment has been obtained and it has not been paid as ordered by the court it will be down to the landlord to enforce payment. There are several ways in which the Court can enforce judgment, but the landlord must take the initiative. Enforcement of judgment does not happen automatically, and the court will do nothing unless asked.
There are various options and enforcement methods available. Sometimes the best option will be obvious. For example, if the judgment debtor (e.g. a tenant or guarantor) owns a house and property you may go for a charging order or a warrant of control to send in the bailiffs. If the judgment debtor is in regular employment you may go for an attachment of earnings order.
Here are the enforcement methods and a description of how each of them can help.
High Court Enforcement (for debt over £600) or County Court Bailiffs (for debt under £600)
Court Enforcement is a very popular method of enforcing a judgment debt. It can be done quite speedily. It requires the issue of a court document (in the High Court, a writ of control and in the county court, a warrant of control, which commands an enforcement officer to seize and sell a judgment debtor’s goods, provided they are not exempt goods or do not belong to a third party) and raise funds to satisfy a judgment debt. Obviously, this method depends on the judgment debtor having goods of sufficient value. The enforcement officers can also take payment in full or take payment by instalments (subject to agreement with you).
Attachment of Earnings Order
This is a very effective method of enforcement but can only be used where a judgment debtor is in regular employment. It is an order of the court addressed to the debtor’s employer that the debt be paid by instalments out of the debtor’s earnings from employment. The debtor’s employer is ordered to deduct money from the debtor’s wages and send the money to the court.
The court fixes a protected earnings rate of £200 a week and a normal deduction rate of £25 a week. This means if the debtor earns £250 in one week, then the full deduction of £25 must be paid and the debtor will take home £225. However, if they only earn £210 a week, the amount to be paid to the court will be £10 and the amount of £200 is safeguarded.
Charging Orders
A charging order is a way of securing a judgment debt by imposing a charge over a judgment debtor’s beneficial interest in land, securities, or certain other assets. This prevents the judgment debtor from selling the land without paying what is owed to the judgment creditor (the landlord) if there is enough equity after payment of prior creditors. Note that an application for a charging order calls for the court to exercise discretion and it will be looking to see that enforcement by this method is proportionate. A charging order is most effective when there is substantial equity in a property and the judgment debtor is the sole owner.
The process for obtaining a charging order can be slow, and a charging order of itself does not realise funds to satisfy a judgment debt. That requires a sale of the property, which does not automatically flow from the obtaining of a charging order. The judgment creditor has to apply subsequently for an order for sale of the property, or simply await its sale in due course by the owners.
Third party Charging or previously known as a Garnishee orders
This is an order requiring a third-party to pay a debt to the judgement creditor from money otherwise owed to the judgement debtor. It is made without notice to the debtor, as clearly otherwise they would move their money on.
The Court can order that a debtor’s money held in a bank or building society account be paid directly to the landlord in payment of the judgement debt. Clearly the order will be ineffective unless there is actually money in the debtor’s bank at the time the bank receives the order and it is necessary to have the judgement debtor’s bank details to apply for the order.