Opinions and insights from our Debt Recovery team
How to Serve & Enforce a County Court Judgment
- AuthorMartin Spencer
Getting a County Court Judgment (CCJ) is an important step in the debt recovery process and is often a relief to creditors. It is an official confirmation that the debtor owes money and must repay. However, getting the CCJ does not mean that the debtor will automatically pay up.
So what happens if a CCJ is not paid? A creditor that has obtained a CCJ against a business or individual has a range of enforcement options available to them.
Here, our debt recovery specialists outline some of the methods you can use to enforce a County Court Judgment and try to recover money owed to you.
Things to think about before enforcing a County Court Judgment
Has the debtor received the CCJ?
In most cases, the court will serve the County Court Judgment upon the debtor. However, it is worth making contact to ensure they have received the CCJ, especially if the judgment was made in default due to the debtor’s lack of response to the court claim.
This could prevent delays further down the line should the debtor claim they never received the money claim form or CCJ.
Has the debtor had an opportunity to repay?
The CCJ will typically give the debtor 14 days to repay the debt or deadlines by which instalments must be paid. Typically, you should not take enforcement action until the debtor has defaulted.
The exception to this is where you choose to obtain a Charging Order – these may be applied for as soon as the CCJ has been made to secure the debt and protect your position.
Does the debtor have the financial means to repay the debt?
If this has not been investigated already (or your investigations are not recent), you should take steps to gain an understanding of the debtor’s financial resources.
This will help you take the most appropriate course of action. For example, discovering that the debtor owns a property unencumbered by legal charges may present an opportunity to obtain a Charging Order and a first charge over a valuable asset.
For companies, some financial information will be available from Companies House, including annual accounts, information about any insolvency proceedings and any charges against business assets.
For individuals, it may be possible to conduct a credit search to gain a clearer picture of the debtor’s financial obligations and behaviour, such as other debts and missed payments.
Another option is to apply to court for an Order for Questioning (also known as an Order to Obtain Information). This type of order allows a creditor to compel a debtor subject to a CCJ to attend court to answer questions about their personal circumstances and finances. This information can then be used to decide what type of enforcement action (if any) is appropriate.
For both individuals and companies, open communication and obtaining other publicly available information, such as Land Registry registers of title, can assist you.
Are there any circumstances that could prevent enforcement?
If insolvency or bankruptcy proceedings have been instigated, it will not be possible to take further enforcement action unless you have security for the debt or are able to obtain the leave of the court. A CCJ alone will not give you priority status should the debtor be wound up or made bankrupt.
It is also important to consider the debtor’s personal circumstances and whether there is anything that would make enforcement action unattractive. For example, a creditor – particularly one subject to financial regulations and consumer credit concerns – may have policies in place to identify and deal with vulnerable debtors.
How to enforce a county court judgment
Bailiffs and High Court enforcement officers
This is an effective option to recover debts from both individuals and companies – bailiffs can attend a debtor’s home or place of business to obtain payment or seize goods.
It is necessary to apply for a Warrant of Control (or Writ of Control if going via the High Court) which gives the bailiffs or enforcement officers the power to enter the debtor’s premises to seek recovery of the debt.
Transferring a CCJ up to the High Court for enforcement by High Court enforcement officers tends to be a faster process than using county court bailiffs. However, this process can only be used for debts over £600. Debts under £600 should be enforced by county court bailiffs.
Charging Orders and Orders for Sale
Although CCJs are court orders, they still tend to be what are known as ‘unsecured debts’, meaning they are not priority debts and are not secured over assets that could be sold to repay the debt.
However, a CCJ may be secured by obtaining a Charging Order over the debtor’s property. This can strengthen your position in a number of ways:
- The secured debt is a priority debt – the debtor should (in theory) prioritise paying this debt over their unsecured debts.
- You may be able to force the sale of the asset to repay the debt by obtaining an Order for Sale from court.
- If the debtor goes insolvent, secured creditors are top of the list in terms of priority so you have a greater chance of recovering your money.
Before applying, you should consider all the circumstances that could affect their application and chances of recovery. For example:
- Whether there is any equity in the property.
- Whether the debtor lives with other people, particularly children, elderly people or people with disabilities.
There are two stages to obtaining a Charging Order. First, you must apply for an Interim Charging Order which may be made without a court hearing. You must then notify interested parties, such as the debtor themselves and other secured creditors (such as the debtor’s mortgage lender). You should also register your interim charge at the Land Registry.
Next, you can apply for the Final Charging Order. The debtor has 28 days between the issue of an Interim Charging Order and application for Final Charging Order to object. Any objections will usually be considered at the court hearing for the Final Charging Order and the court may attach conditions to the Order to reflect the debtor’s circumstances. For example, the Order may be suspended while the debtor is keeping up with repayments.
Once the Final Charging Order has been made, you can make a decision about whether to push forwards with an Order for Sale. Alternatively, you may choose to rest on your security while the debtor makes repayments or until enforcement action becomes more viable.
Third Party Debt Orders
If you have a CCJ, you may be able to apply for a Third Party Debt Order to freeze and take money directly from a debtor’s bank account, building society account or business account.
Formerly known as a Garnishee Order, Third Party Debt Orders can come in useful where a debtor is being particularly evasive as they can be made without notifying the debtor, giving you the element of surprise. Furthermore, the Order compels a third party, such as a bank, to take the required action rather than the debtor themselves.
Like any method of debt recovery, it is vital to gain an understanding of the debtor’s finances before applying for an order.
Attachment of Earnings Orders
An Attachment of Earnings Order allows you to compel an individual debtor’s employer to deduct payments directly from the debtor’s wages.
A CCJ allows you to obtain a ‘Non-Priority Order’. Under a Non-Priority Order, a certain amount of money can be deducted from the employee’s wages each payday – referred to as the ‘Normal Deduction Rate’.
Employees have a ‘Protected Earnings Rate’ and must be allowed to take home a minimum amount of their wages. If the Protected Earnings Rate does not allow the employer to deduct the full Normal Deduction Rate, the unpaid payment cannot be carried over to the next payday. Similarly, if the employee stops working, the Order will lapse, although the creditor may apply for a new Order should the debtor find new work.
Bankruptcy and winding-up proceedings
Where it becomes clear that the debtor does not have the financial means to repay the debt, the final resort for a creditor looking to minimise their losses is insolvency – bankruptcy where the debtor is an individual or winding up proceedings where the debtor is a company.
Typically, the first step to make someone insolvent is to issue a Statutory Demand. However, a CCJ can also form the basis of a Bankruptcy Petition or Winding Up Petition. This has been especially important during the Covid-19 pandemic as Statutory Demands for winding up businesses have been temporarily suspended until the end of September 2021.
The effect of insolvency is that all the debtor’s assets will be liquidated and divided between their creditors. This often means that an unsecured creditor does not receive repayment in full but recovers more than if the debtor was left to struggle to repay their debts.
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