I have a judgment but the debtor has not paid, what are my options?

Karen Bright from Bishop & Sewell looks at creditor enforcement options

Obtaining a county court judgment does not always result in the debtor making payment. You may have to take enforcement action against the debtor to get payment. There are various methods available depending on the particular circumstances and the outcome you may wish to achieve.

Bankruptcy / Liquidation

If the judgment debt is over £5,000 a statutory demand can be served on the debtor. The statutory demand requires the debtor to pay the debt within 21 days failing which a bankruptcy or winding up petition may be issued. The main difficulty can be personally serving the debtor. The effect of a bankruptcy / winding up petition is that it results in the appointment of a trustee / liquidator who is appointed to realise all the assets and liabilities of the individual or company. Assuming there are sufficient funds distributions will be made to creditors in a strict order.

There are no guarantees that there will be sufficient assets to pay the sums owed. Whilst the cost of a statutory demand is relatively modest, the cost of the related bankruptcy and winding up procedures are quite significant.

Charging Order

A charging order secures a judgment debt by imposing a charge over a debtor's interest in land, securities or certain other assets. The application for a charging order is a two-stage process. Firstly the court considers on paper and without the debtor’s knowing whether to make an interim charging order. Assuming an interim charging order is granted, this is registered on the property title and then served on the debtor and all known creditors. The debtor and creditors will have 28 days to oppose a final charging order being made. If no opposition is received by the court within the relevant period, it is likely that the court will grant a final charging order probably without a hearing.

As a charging order is registered against the property and remains on the title until the property is dealt with, it will bind anyone who acquires the property. It is also worth noting that interest will accrue until the charging order is removed. The property however may not be sold for a number of years, and as a result it could take a long time for the creditor to obtain payment.

Order For Sale

In some circumstances you may be able to apply to the court for an order for sale following a charging order being granted. The court has a discretion as to whether to grant an order for sale and it must consider all the circumstances, including but not limited to the judgment debtor's conduct, the prospects of the debt being paid without the sale, the size of the judgment debt, the value of the asset sought to be sold, whether the asset is a family home and whether it is owned by the judgment debtor alone or jointly with a third person. Unless the debt has been outstanding for a considerable period or the debtor’s conduct justifies it, the court is unlikely to make such an order unless the amount is substantial.

Taking control of goods using writs and warrants of control

Taking control of goods can be one of the quickest ways of enforcing a judgment and therefore it has become a very popular method more recently. The first step would be to issue either a writ of control in the High Court or a warrant of control in the County Court. These then permit an enforcement officer to start the process of taking possession and selling the debtor’s goods. It should be noted however that the value of the goods need to be of a significant value for the officer to raise funds to satisfy a judgment debt and any other enforcement costs. There are also a number of items that an enforcement officer cannot take, such as tools of the trade or goods purchased with credit / finance.

Third party debt order

This is often used where a judgment creditor knows the bank details of the judgment debtor. An application can be made for the third party to pay you sums it holds on behalf of the debtor. Success of this will depend on there being sufficient funds in the debtor’s bank account. Obtaining the order is a two stage process whereby an interim third party debt order and then a final third party debt order must be obtained. Once the order is granted by the court, sums which are in possession of the third party are frozen and then paid to the creditor.

Attachment of Earnings

Another inexpensive and fairly straightforward way of enforcing a judgment is an attachment of earnings order which requires an employer to make payment of sums it owes to the debtor to a third party. This is likely to be payments by instalments rather than a lump sum. The instalment amount depends on the salary of the debtor and his other circumstances. This method of enforcement is likely to work where the debtor is employed and details of his employment are known.

There are various enforcement options available to a creditor. The size of the judgment debt, the length of time and the costs of enforcement are likely to be the main considerations for the creditor. Should the creditor be in any doubt which enforcement option to choose, he / she may wish to obtain professional advice from a solicitor.

Karen Bright is a Partner at Bishop & Sewell, Dispute Resolution Team.

If you are concerned about which enforcement option is right for you, then please call the Litigation Department on 020 7631 4141 or visit Bishop & Sewell's website