13) Enforcement of Money Judgments Flashcards
Investigating the judgment debtor’s means - Options
To determine the best method of enforcing the judgment, it may be necessary to obtain
more information about the judgment debtor’s financial circumstances. There are two
possibilities:
(a) instruct an enquiry agent - expensive; and
(b) apply to the court for an order to obtain information from the debtor (oral examination)
Order to obtain information
This is a court order requiring the debtor to attend before an officer of the court to be questioned on oath about their finances or those of a company of which they are an officer.
Order to obtain information - Procedure
a) The judgment creditor files a notice of application at court setting out details of the name and address of the debtor, the judgment creditor is seeking to enforce and the amount owed.
b) Order is personally served on the debtor
c) Standard questions are asked, although the creditor may also request additional ones. The officer will make a written record of the responses given by the debtor, who will be invited to read and sign it at the end of the hearing.
Methods of enforcement - Taking Control of goods
Seizure and sale of debtor’s goods. Is used where the amount owed may be recovered by seizing the debtor’s possessions of an equivalent value. The items are then sold by public auction. Enforcement officers cannot force entry into a debtor’s home, but they can use reasonable force to enter business premises if they believe the debtor’s goods are inside.
Methods of enforcement - Taking Control of goods - Exempt items
‘Necessary items exemption’ only applies to individuals and not to a judgment debtor that is a partnership, limited company and so on. Clothes, bedding, furniture and household equipment, which are reasonably required for the basic needs of the debtor and their family, cannot be taken. Neither can work tools, computers, vehicles and other equipment that are necessary to the debtor personally for work or study, subject to a maximum aggregate value of £1,350. In addition, goods that belong solely to another, such as a spouse or other family
member, or those subject to hire or hire-purchase agreements may not be removed.
Methods of enforcement - Taking Control of goods - Procedure - High Court
Sum for £5000 or more.
(a) The judgment creditor delivers a request and two copies of a writ of control to
the court office, together with the judgment.
(b) The court seals the writ and returns one copy to the creditor.
(c) The creditor then forwards this to the HCEO for the county where the debtor resides or
carries on business, for the writ to be executed.
Methods of enforcement - Taking Control of goods - Procedure - County Court
Less than £500.
(a) The creditor files the form of request for a warrant of control at the County Court hearing
centre that serves the address where the goods are to be seized.
(b) The warrant is executed by the enforcement officer for the district where the debtor
resides or carries on business.
Methods of enforcement - Taking Control of goods - Advantages and Disadvantages
Cannot force entry into a debtor’s home and a savvy debtor may simply refuse them entry. In the High Court, one of which is that HCEOs
are usually paid on their results – based on the amount collected – and so it is generally
perceived that they are more effective in achieving a successful conclusion. Also, in the High Court, interest continues to accrue on the debt.
Methods of enforcement - Charging Orders
A charge on the debtor’s land or
securities. The charging order will sit on the asset until such time as it is worth the creditor
pursuing the matter further and applying for an order for sale.
Methods of enforcement - Charging Orders - Which Court
Where the debt is more than £5,000, the application for a charging order can be made either in the County or the High Court.
Methods of enforcement - Charging Orders - Procedure - Stage 1 - Interim Charging Order
The creditor must file an application notice including details of the judgment debt, the land over which the charging order is sought, and the names and addresses of any other person affected such as a party with a prior charge over the property. The creditor must also file a draft interim charging order (ICO) . The ICO, the application notice and any documents filed in support must be served by the
creditor on the debtor within 21 days. The debtor then has 14 days to request that the court officer’s decision be reviewed by a judge
Methods of enforcement - Charging Orders - Procedure - Stage 2 - Final Charging Order
If any person objects to the making of a final charging order (FCO), they must file and
serve written evidence stating the grounds of objection within 28 days of service of
the ICO.
Methods of enforcement - Charging Orders - Procedure - Stage 3 - Order for Sale
If the interim order is made final, the creditor has a charge on the debtor’s land, which
can be enforced by an order for sale of the property. However, in order to do so, fresh
proceedings must be commenced.
Methods of enforcement - Charging Orders - Advantages and Disadvantages
Although it does not necessarily result in prompt payment, a
charging order does secure the judgment debt. Furthermore, it may encourage the debtor to
make efforts towards settling the debt, particularly as interest will continue to accrue. However, a charging order will not always be effective. It is not appropriate where there are
significant other prior charges or mortgages over the property so that there may be no or
insufficient equity available to enforce against, or where the debtor has no beneficial interest over it.
Methods of enforcement - Third Party Debt Orders
An order requiring a third party who owes money to the debtor to pay it directly to the creditor.
