Enforcement of Small Claims Judgments in the County Court - Part 2
In the last of this two-part series, I'll discuss the more esoteric options that are open to you. The Judgment Creditor is there when all the safety nets fail and you end up issuing proceedings against your debtor. Also, I'll discuss how you can ensure that you use the right methods to recover your debt and whether these methods can be applied to your specific type of Judgment Debtor.
Charging order on land
This method of enforcement gives the judgment creditor the equivalent of a mortgage over the debtor's land. The charging order remains on the land registry records and your debtor will have to clear the judgment debt before the land can be sold. Since the judgment does not attract interest and the wait before sale may be several years, the delay in payment may significantly reduce the value of this method to the judgment creditor.
A charging order can be made against jointly owned property but is registered at the Land Registry as a caution, not a charge. The general effect, however, namely to restrict your debtor's ability to sell, is the same.
The application is made initially without notice when the District Judge will make a 'charging order nisi' which is converted into a 'charging order absolute' after an inter-parties hearing. The usual way of proving that the debtor owns the land is to produce a copy of the entry at the Land Registry
Charging order on securities
The charging order procedure can also be used against stocks and shares including government stock and dividends.
Order for Sale
A judgment creditor, who has registered a charging order against the land, may apply to the court for an ‘order for sale’. The procedure depends on whether the land is jointly owned or is in the sole name of your debtor. The district judge has discretion on whether to make the order and if the judgment debt is small, then the order for sale may not be made.
Timescale for enforcement
A judgment debt can be enforced at any time after judgment. However, a registration of judgment debt runs out after six years, and the permission of the District Judge is required to issue a Warrant of Execution after six years. Confusingly, if a fresh action is started by way of enforcement (for example an application for an order for sale following a charging order) this must be commenced within six years.
Third Party Debt Order proceedings
This is an action to intercept a debt owed to your debtor by someone else and to get the money paid to the judgment creditor direct. The most usual debts intercepted in this way are credit balances in the bank and building society accounts and trade debts owed to your debtor. A bank or building society can take up to £55.00 expenses before paying the money over so if for example, your Judgment Debtor has £56 in his/her account you will receive the princely sum of £1!
The existence of these debts may be known to the creditor or may have been established by oral examination (see the previous article).
The application is made without notice supported by a statement and if the District Judge is satisfied that the debt exists, an order 'to show cause' is made. The court fixes a date when your debtor's creditor must show cause why the debt should not be paid to the judgment creditor. The court lists a return date and the money will be paid over to the judgment creditor if the order is made 'absolute'.
Remember that it is not always necessary to enforce a judgment. Sometimes a letter stating the current situation and requesting payment can have a marked effect on your debtor.
In situations where the full force of the law is required, the above procedures will serve as a guide to effective enforcement in the County Court.
More on part 1, getting paid as a freelancer and debt collection.
Clayton M Coke PRMS, London
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