Obtaining a money judgment does not automatically bring the matter to a close. In many cases the judgment creditor would have to take enforcement steps against the debtor in order to realise funds to satisfy the money judgment. To enforce a money judgment, the debtor must have failed to pay the judgment when it fell due or failed to pay an instalment due under the terms of the judgment.
There is no strict time limit for a creditor to enforce a judgment entered by English courts. However, the courts will not look kindly on a judgment creditor that delays enforcing the judgment. The creditor may also lose interests that accrued during those periods.
A judgment creditor must obtain permission from the courts to issue a writ of execution on any judgment that is more than six years old.
There are various methods of enforcement open to a judgment creditor. The method of choice will depend on such facts as the amount of monies owed and the assets owned by the judgment debtor.
Although most judgment creditors use one enforcement method at a time, it is in fact possible for a creditor to use more than one method of enforcement simultaneously. However, a judgment creditor must avoid recovering twice for the same judgment debt.
We now look briefly at six enforcement methods.
Writ and warrant of control
A writ or warrant of control instructs a High Court enforcement officer or a County Court bailiff to seize and sell at auction goods belonging to the debtor. The purpose of this enforcement method is to raise enough funds from the sale of the debtor’s goods in order to satisfy the money judgment.
The maximum amount that the judgment creditor can ask a County Court bailiff to try to get back is £5,000. If you want the enforcement officer to try to get back more than £5,000 then you may transfer your judgment to the High Court and ask the High Court enforcement officer to enforce the judgment. The £5,000 limit in the County Court does not apply to judgment obtained under an agreement regulated by the Consumer Credit Act 1974.
This is the procedure by which the assets of a company or individual come under the control of a trustee in bankruptcy or a liquidator. A judgment creditor can apply to liquidate a company (compulsory liquidation) if the judgment debt is more than £750 and the creditor can prove that the company cannot pay the debt.
The threshold for bankruptcy is much higher. A creditor can only apply to make a debtor bankrupt if the debtor owes at least £5,000.
After an individual has been made bankrupt or a company has been liquidated, a trustee or liquidator will be appointed to realise the assets of the individual or company and to distribute money to creditors by order of priority. The trustee or liquidator has a duty to sell assets at the highest price possible in order to obtain enough money to satisfy the creditors.
After the trustee or liquidator has paid the expenses of the insolvency procedure the secured creditors will then be paid first before unsecured creditors are paid.
Although insolvency proceedings are fairly common methods of enforcement, please note that an unsecured creditor is unlikely to recover the full amount of the judgment debt, if anything at all.
Attachment of earnings
This method of enforcement gives the court the power to order a judgment debtor’s employer to deduct a proportion of the debtor’s earnings and pay to the judgment creditor until the judgment debt is fully paid. Attachment of earnings is only available in the County Court, but judgments obtained in the High Court can be transferred to the County Court for the purpose of obtaining an attachment of earnings order.
A charging order secures a judgment debt by imposing a charge over the debtor’s beneficial interest in land, securities or other types of assets. The charge can be recorded and prevents the judgment debtor from selling or disposing of the land without paying the judgment creditor.
This method of enforcement does not realise funds for the creditor at the outset. However, the judgment creditor may later apply for an order of sale, compelling the debtor to sell the property. Alternatively, the creditor may wait until the debtor sells the property or other creditors obtain possession of the property.
Once the land or asset is sold, the judgment creditor is paid provided there is enough equity remaining after the prior creditors have been paid.
Third-party debt order
The effect of a third party debt order is that monies owed to the judgment debtor by a third party is frozen, seized and paid to the judgment creditor. This method of enforcement is most effective where the debtor has a bank account with funds.
Writ of sequestration
When a person disobeys a court order and acts in contempt of court, the court may order the sequestrator to take control of the person’s property until he has complied with the court order. Although control of the property moves to the sequestrator, title to the property remains with the person in contempt. A writ of sequestration is a draconian step and is rarely used to enforce money judgment.