Enforcement Action

Successfully obtaining a judgment in your favour may amount to a pyrrhic victory if the debt remains unpaid. In those circumstances it may become necessary for enforcement action to be taken to secure payment from the judgment debtor.

At Montpelier Solicitors we offer a full suite of enforcement options supported by years of experience.

Key Methods of Enforcement:

Writ of control and warrant of execution

Execution is often the quickest method of enforcement, is a fairly simple and straightforward procedure and can be used against both individual and corporate debtors. It is the only method of enforcement that does not require a decision by a court. Further, execution can be undertaken alongside other methods of enforcement. However, where more than one method of enforcement is used the judgment creditor should ensure that they notify the court and enforcement agent of any payment received.

Execution 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 take control of and sell a judgment debtor’s goods to raise funds to satisfy the judgment debt. This is an administrative procedure and does not involve a court hearing. Notice to the debtor is not required; however the threat of this step may be enough to secure payment of the judgment debt. Unless the judgment debtor makes payment, his goods must be sized and sold; they cannot be kept by the judgment creditor. Sale is normally by public auction and should be within a reasonable time after seizure. The specified sum should be paid over to the judgment creditor out of the proceeds of sale .

Execution can be enforced against most forms of personal property owned by the judgment debtor that are capable of seizure and sale, with the exception of certain ‘exempt goods’ (such as tools required by the debtor for use in his employment, business or vocation which are exempt to a maximum value of £1,350). This method of enforcement depends on the judgment debtor having goods of sufficient value to meet the judgment debt (and enforcement officer’s charges).

Third Party Debt Order

A third party debt order freezes sums owed to a judgment debtor that are in the hands of a third party, such as a bank. The judgment debtor is prevented from having access to the money until the court makes a decision about whether or not the money should be paid to the judgment creditor. Third party debt orders can be used alongside other methods of enforcement. This method of enforcement involves a two stage process. Firstly, an application for an interim third party debt order, followed by a hearing to determine whether or not to make the interim order final. Third party debt orders can take effect relatively quickly. Following a final third party debt order the third party is obliged to make payment to the judgment creditor and not the judgment debtor. The debt owed by the third party to the judgment debtor is extinguished on the payment to the judgment creditor.

Such an order can be useful where the judgment creditor knows that the judgment debtor has a bank account holding funds or which it is anticipated funds will be paid into. It is important to ensure that there are sufficient funds held in the account at the time the interim order is served. Funds received into the account after the interim order has been served are not affected by the interim third party debt order.

Charging Orders and Orders for Sale

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 acts to prevent the judgment debtor from selling the land without paying what is owed to the judgment creditor, provided that there is enough equity after payment of prior creditors. The charging order or order for sale method of enforcement can be used in addition to other methods of enforcement, either simultaneously or consecutively. The only exception to this is when an attachment of earnings order has been obtained whilst a judgment debtor is paying such an order no other enforcement action can be taken.

This method of enforcement involves a two stage process. Firstly, an application for an interim charging order, followed by a hearing to determine whether or not to make the interim charging order final. The process for obtaining a charging order of itself does not realise funds to satisfy a judgment debt. That requires an application for an order for the sale of the property or assets to be made. The judgment creditor therefore has to progress to an application for an order for sale of the property, or simply await its sale in due course by the owners, or following an order by other creditors. After a sale, there may not be sufficient funds to satisfy the judgment debt in full, or at all, if there are several prior charges.

Benefits of a charging order include that interest continues to run on the sum secured from the date of judgment (assuming the judgment sum is £5,000 or more) through to the receipt of final monies.

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 where there is substantial equity in a property and the judgment debtor is the sole owner. The method is less satisfactory where there is limited equity in the property or it is jointly owned or used as a family home.

Attachment of Earnings

An Attachment of Earnings Order (“AEO”) provides that a proportion of a judgment debtor’s earnings is deducted by his employer and paid to the judgment creditor until the judgment debt is paid. It is only available against individuals who are in paid employment and who owe £50 or more. You cannot obtain an AEO if the judgment debtor is unemployed, self-employed, a corporate or partnership judgment debtor, in the armed forces or a merchant seaman. ‘Earnings’ include any sums payable to a person by way of wages or salary (including bonuses and overtime), pension (including annuities), statutory sick pay and earnings of a company director (provided that the judgment debt is the directors’ personal liability). Where a judgment debtor does not wish his employer to know he has a judgment debt, an application for an AEO can be a useful tool to persuade him to pay the judgment debt.

Upon receipt of an application for an AEO, the court will serve a notice form and a reply form, or statement of means, on the judgment debtor. The judgment debtor must then, within 8 days of service, either pay the money due or complete and return the statement of means with details of his employment, income and outgoings. If the debtor does not reply and the forms are returned as undelivered, the judgment creditor is advised to attempt service himself. If the debtor simply doesn’t reply, the court can order the debtor to either respond or pay the debt in full.

Once a statement of means is received by the court, a court officer or district judge will look at the information and decide in the absence of the parties how much the debtor can afford to pay. The court officer will then go on to decide if he can order an AEO in the absence of the parties or, alternatively, he can order a hearing to decide in the presence of the parties whether an AEO should be made. If an AEO is made, it is sent to both the parties and the debtor’s employer. The order requires the employer to make periodic deductions from the debtor’s earnings and pay these amounts to the collecting officer of the court.

AEO’s are a popular method of enforcement, as they are inexpensive and fairly easy to obtain. 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 as often only low payments are ordered. Interest does not accrue to the debt and it can take many years to recover in full. The use of an AEO may also preclude use of other methods of enforcement – the leave of the court is required to levy execution whilst an AEO is in force.

Where the judgment debtor has other creditors and his total indebtedness does not exceed £5,000, the court has a duty to consider whether the debtor’s liabilities should be dealt with together under a county court administration order and can refuse an application for an individual AEO. Under a county court administration order, the judgment debtor makes one payment to the court each week or each month. The money might be taken form his earnings. No interest is payable. While the judgment debtor is paying, his creditors cannot take any further action

Our approach to dispute resolution and enforcement is the hallmark of our success in this field.

Our Fees: Enforcement Action (Up to £25,000)

These costs apply where the proposed enforcement action involves a debt which does not exceed the sum of £25,000.

At that point we will pass the matter on to a member of our dispute resolution team and discuss any further work required and provide you with revised advice about costs if necessary, which will be charged at our standard hourly rates unless otherwise agreed in writing.

For enforcement action in respect of judgment debts valued up to £25,000.00 – our fee for the work outlined below is estimated from between £1,500 to £10,000 + VAT and disbursements.

The relevant court fee(s) payable will dependent on the proposed enforcement action. Please go to the following link to ascertain the current court fees applicable:- https://www.gov.uk/court-fees-what-they-are

Should you wish to proceed with enforcement action please note that:

The VAT element of our fee cannot be reclaimed from your debtor if you are already registered for VAT.
Interest and compensation may take the debt into a higher banding, with a higher cost.
Additional disbursements may become payable for example in respect of bailiff, high court enforcement officer fees, or counsel's fees

Our fee includes: