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Navigating Enforcement Methods: What to Do When Your Defendant Fails to Pay

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Navigating Enforcement Methods: What to Do When Your Defendant Fails to Pay

So, you've succeeded in your claim, securing a court order mandating the defendant to settle damages and costs within 28 days. However, the question arises: What steps should you take when the allotted 28 days elapse and the defendant has not fulfilled their payment obligation?

Upon reflection, it becomes evident that the considerable time and effort invested in reclaiming your funds has resulted in possessing a mere piece of paper, essentially a symbolic I.O.U. However, the legal system doesn't conclude with granting you a court order and relying on the defendant's voluntary payment. Instead, you have the option to pursue diverse enforcement measures aimed at recovering the owed funds to you. In this article, we'll list the various enforcement methods available and explore the optimal times and approaches for when to use them.

Send in the Bailiffs

You may have seen television shows of bailiffs entering private residences or businesses to seize assets. However, initiating the involvement of bailiffs requires additional steps. The crucial first step is obtaining a Writ of Control or Warrant of Control; a process facilitated either through your legal representative or by directly contacting the bailiffs.

Why would you use this method?

  • You can use this type of enforcement against an individual or a company
  • It is often a quick method of enforcement
  • The procedure is straightforward to complete
  • It is one of the more popular methods of enforcement

Why would you not use this method?

  • The goods from the debtor must be in their name and not on a finance or hire-purchase agreement.
  • All of the goods will be sold at an auction. Sometimes, there is not enough value in the items to sell at auction to cover the bailiff's fees and the debt owed.
  • The writ or warrant of control can only be used for six years. If you want to enforce it over a longer term, you must apply to the Court again. If you don't enforce within six years, you may only be limited to interest accrued over the initial six years.

Attachment of Earnings 

This option is only viable when the defendant is employed as an individual. As the name implies, Attachment of Earnings involves linking the debt directly to the defendant's earnings. Subsequently, the owed amount is automatically deducted from the debtor's salary, either weekly or monthly.

Why would you use this method?

  • Money will be taken from wages, similar to how taxes are deducted. The defendant will simply receive less income in their pay packet each month.
  • This option is useful where the defendant is employed but cannot access large sums of money to settle the debt.
  • The process is relatively straightforward and inexpensive.

Why would you not use this method?

  • It will only work if the defendant is in paid employment. They cannot be a sole trader or a company.
  • Interest will not accrue on this debt.
  • Paying off the debt can take a long time because you will only get a small percentage of the defendant's wage each time their employer pays them.
  • You cannot use this with other enforcement methods and would need the Court's permission to do so.

Third-Party Debt Orders

Similar to the attachment of earnings approach, the Third-Party Debt Order method utilises funds under the control of a third party to settle the judgement debt. Typically, this involves obtaining an order against a bank, but it can also be pursued against any entity holding the defendant's funds.

Why would you use this method?

  • It can be quick to recover the money owed to you
  • Ensures that the total value of the debt is paid in cash

Why would you not use this method?

  • You will need evidence to show that the third party is holding the defendant's money. This can often be challenging. 
  • You cannot make a claim against a joint bank account.
  • It cannot be used to enforce foreign debts.

Charging Order and an Order for sale

Should the defendant in your case be a property owner, you can enforce a Charging Order on the property for the outstanding debt. This action restricts the defendant from selling their property without first settling your debt. Alternatively, you can initiate the forced sale of the property if needed.

Why would you use this method?

  • Once the charge is on the property, you can bide your time to decide if or when you want to try and force a sale. For example, if property prices have fallen, you might choose to wait.
  • Interest will continue to accrue on the debt owed to you.

Why would you not use this method?

  • It is a three-stage process. You will need to obtain an interim order, a final order and then an order for sale before you can recoup the money owed.
  • The prospect of recovering the entire debt may be limited when the property holds minimal equity. This limitation may arise from multiple existing charges on the property, placing you further down the priority list for payment.
  • You may not force a sale if the property is held in joint names.

Insolvency Proceedings

The nature of your order, whether against an individual or a business, dictates the type of legal action pursued—either a bankruptcy petition for individuals or a winding-up petition for companies. Following the issuance of a bankruptcy or winding-up order against your defendant, you assume the status of a creditor, thereby securing a rightful share of the owed funds.

Why would you use this method?

  • The threat of this action is sometimes enough for the defendant to pay you or at least enter into a payment plan with you.
  • Bankruptcy can significantly impact certain individuals, particularly those in career-sensitive positions like company directors, rendering this approach particularly effective.

Why would you not use this method?

  • The courts have discouraged using insolvency procedures as a debt collection exercise.
  • Bankruptcy petitions can only be issued in the case of debts over £5,000
  • Secured creditors (such as a mortgage or secured loan) take priority over a judgment creditor. At the end of the process, you may only receive a small proportion of the debt, and sometimes you won't receive anything at all.

Executing your options 

As demonstrated above, various avenues are available for successfully collecting debt. However, the appropriateness of each method depends on your specific circumstances and those of your debtor. Selecting the right enforcement method is pivotal, as it will determine both the speed and the extent to which you can recover the debt.

For more information and advice to help you decide how best to recover your debt, please contact Mollie Leak in our Commercial Litigation and Dispute Resolution team. Mollie can talk you through the options and help you execute your chosen method to achieve a successful outcome. Contact us by calling 023 8071 7487 or email mollieleak@warnergoodman.co.uk.