Enforcement of Money Judgments
You have issued proceedings against someone who owed you money and the Court entered judgment against him. What now? This article aims to summarise the various options available to enforce a money judgments and some preliminary points.
You can use any method available, except where a statute, rule or Practice Direction provides otherwise. You can also use several different enforcement methods either simultaneously or consecutively.
Interest will continue to accrue on judgment debts larger than £5,000 currently at a rate of 8% per annum and you can also recover the court fees and an amount reflecting your legal costs that is fixed by the court rules, assessed by the court or agreed between the parties.
The judgment debtor must have been given an opportunity to pay the judgment debt. Unless the judgment states otherwise, the general rule is that the judgment debtor has 14 days from the date of the judgment to make payment. Enforcement steps can only be taken if the debtor failed to pay by the due date or failed to pay an instalment on the day ordered by the Court.
It is important to ascertain what the judgment debtor’s assets are. Enforcement costs money, which will be wasted if the judgment debtor has no assets to pay the judgment. There are a number of ways of obtaining such information, such as asking the debtor. If he does not respond voluntarily, you can apply for an order to obtain information under Civil Procedure Rule 71. The order would require him to give answers orally on oath to a court officer. Failure to comply will result in the matter being referred to a judge, who may commit the debtor for contempt of court. The order must be personally served on the debtor and a process server’s fee will be payable.
A disadvantage of both these options is that the debtor will be warned that you are considering enforcing and this may lead to assets being hidden or transferred.
Other options are:
- Instruct an enquiry agent to make enquiries about the judgment debtor and his assets. Depending on the circumstances, this may be costly.
- Conduct a Land Registry search to establish the ownership of any address you have for the judgment debtor. Inspection of the charges register will also ascertain whether the property is mortgaged and to whom, but not the outstanding balance.
- Check the Register of Judgments, orders and fines. All County Court and High Court judgments for the payment of money since 6 April 2006 are in this public register. They remain on it for six years from the date of the judgment unless the judgment is set aside or reversed. Note that judgments entered in Family proceedings, the Administrative Court or the Technology and Construction Court are exempt from registration.
- If the debtor is a company, conduct a search at Companies House and obtain basic information about the company and their latest filed accounts.
- Check for any insolvency procedures against the debtor at the Bankruptcy and Companies Courts, Companies House and the London Gazette.
Fees are payable to the relevant service providers to do the above searches.
If preliminary enquiries show that a judgment debtor is (or is likely to become) insolvent, it may not be worth taking steps to enforce, because you are unlikely to get back the full amount of the judgment debt and to start enforcement will therefore only lead to wasted time and costs. If you are not a secured creditor, your debt will rank alongside other unsecured creditors behind preferential payments, the expenses of the insolvency and secured creditors. There are also statutory restrictions on pursuing claims against insolvent debtors which may prevent you enforcing your judgment.
Here is a brief summary of the main methods of enforcing a money judgment.
- Execution against goods by writ of fieri facias or warrant of execution
- Third party debt order
- Charging orders
- Attachment of earnings
- Insolvency proceedings
Execution against goods is a popular method of enforcing a judgment debt. It requires the issue of a writ of fieri facias in the High Court or a warrant of execution in the County Court, 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. Execution can be done quite speedily, but it depends on the judgment debtor having goods of sufficient value.
By third party debt orders, sums owed to a judgment debtor that are in the hands of a third party (such as a bank) are frozen and seized for the benefit of the judgment creditor. Third party debt orders are not the most popular method of enforcement, as they depend on there being a third party debt. However, they can be useful where the judgment creditor knows that the judgment debtor has a bank account into which his salary is paid.
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 settling his debt to the judgment creditor, provided that there is enough equity left for the judgment creditor after payment of prior creditors. For a court to use its discretion to grant a charging order, it will examine whether 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. To satisfy the debt, the judgment creditor then has to apply separately for an order for sale of the property. Alternatively, he could simply await its sale in due course by the owners or following an order obtained by other creditors.
An attachment of earnings order provides that a proportion of a judgment debtor’s earnings is deducted by his employer and paid to the judgment creditor in instalments, until the judgment debt is satisfied. It is only available against individuals and in the County Court (although a judgment can be transferred from the High Court to a County Court for the purposes of obtaining an order). Attachment of earnings orders are a popular method of enforcement, as they are inexpensive and fairly easy, but it can take a long time to pay off a large judgment debt by this method.
Note that, 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. Under such an order, the judgment debtor makes one payment to the court each week or month, from which the court attempts to pay all its creditors. If it is making a county court administration order, a court can refuse an application for an individual attachment of earnings order.
If you are owed more than £750 by an individual judgment debtor, you can apply to make him bankrupt. You can also apply for a debtor company to be wound up. After a bankruptcy or winding-up order is made, the judgment debtor’s assets will be collected by a trustee in bankruptcy or liquidator, and distributed among all the creditors under insolvency law. However, this can be expensive and time-consuming, and may not ultimately lead to any recovery. The threat of insolvency can sometimes lead to judgment debtors making payment, but the courts discourage the use of insolvency procedures as a debt collection exercise. If the debt is genuinely disputed or if the judgment debtor has a genuine cross-claim or right of set-off, then the courts may not only dismiss your petition, but also make a costs order against you.
There is no guarantee that taking enforcement action will successfully recover the money you are owed. When deciding whether to enforce a judgment (or to pursue a claim at all), you will need to take into account the court fees and legal costs and the risk that you will not recover these if enforcement is unsuccessful. Although you should avoid delay, taking enforcement action through the courts should be a last resort, after attempts to obtain payment from the judgment debtor voluntarily have failed.
If you wish to learn more about the contents of this article, please contact Demelza Butler email@example.com.