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Enforcing a Debt?

Available to you is the process of applying through the courts for information about the financial state of a party. Further, a creditor can apply to the Court for an information order to obtain details from third parties, such as banks and credit reference agencies or from HM Revenue and Customs, about a debtor's means.

Obtaining information from a third party, as opposed to the debtor, has the advantage that it is much more likely to be reliable and useful when deciding what other enforcement proceedings should be brought. In the long run, time and costs can be utilized more effectively, particularly when the sums due are substantial. Providing that the debt is outstanding and there is not a moratorium on proceedings as can arise due the course of a debtor being placed in administration, then it is possible to serve any number of information orders.

Although it is not a requirement, an information order can also provide evidence to assist when applying for a third party debt order. Under the Civil Procedure Rules, provided that the debt is a fixed amount and due to the creditor, a creditor can obtain a third party debt order. In most cases a third party debt order will be served on a bank or building society, but it can also be used to obtain funds from anyone who holds money for the debtor, for example the debtor's solicitor.

The procedure for applying for a third party debt order is twofold. Initially the court will, upon the production of sufficient evidence that the debtor has an account with the third party, grant an interim third party debt order.

With the risk of funds disappearing, this should be done without notice to the debtor or third party. Once the interim order has been issued and served it acts as an equitable charge over the debt providing protection from funds being removed. The interim order requires the third party, within seven days, to confirm the account number and whether the account is in credit. If no response is forthcoming, the court is entitled to assume that the third party holds the money and so will issue a final debt order.

Timing of when to obtain and serve the order is critical because only the money contained in the account when the interim order is served can be subject to the order. Also, the third party should take care not to release the funds to the creditor until a final order has been obtained. Otherwise the debt will not be discharged and the third party will be required to make the payment twice.

Such orders will not be appropriate in all cases and much will depend upon the value of the outstanding debt. Other options include, taking control of the debtor's goods up to the value of the debt or by obtaining a charging order over land, stock or funds in court.

The process to seize goods, known under old legislation as a "writ of fieri facias" or a "writ of fi fa", and now known as a Writ of Control is still preferred by many creditors. Once obtained, an enforcement officer can attend the debtor's premises and either seize the goods or take "walking possession." Walking possession means that the enforcement officer literally walks around the premises and compiles an inventory of all the items which are seized. The items are not removed but remain with the debtor subject to the charge. This method is effective and relatively cheap to execute and a commercial debtor can continue to operate their business. Presuming the company is facing financial difficulties, this might enable it to recover but failing that, the goods will remain subject to the charge, providing the creditor with protection in the event of insolvency.

Under The Tribunal Courts and Enforcement Act 2007 all bailiffs are known as enforcement agents and only an individual who holds the necessary certificate can act as an enforcement agent. This is to remove the practice of unregulated debt enforcement. Under the Act, any person who knowingly or recklessly purports to act as an enforcement agent is guilty of a summary offence and, on conviction, can be fined.

The same method of enforcement will never be appropriate in all cases and it is always necessary to review the particular circumstances of a debt before deciding upon the route for recovery. For further advice please contact our debt recovery team on 01604 828282 or 01908 660966 or complete our online contact form.

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