Now that the court has ordered your tenant / the debtor to pay you an amount of money you have obtained a monetary judgment.
Whilst the monetary judgment will subsequently be registered against your debtor in the Register of County Court Judgments, the real objective of obtaining a money judgment is yet to be achieved (i.e. turned into money).
How will we do this?
Assuming that the debtor has not offered to pay the judgment in full or offered other settlement proposals which are acceptable to you the first thing we will need to know is where your debtor has moved to?
Now unless your debtor has been courteous enough to leave you with a forwarding address we will undoubtedly need to make some further enquiries. Ordinarily we will instruct enquiry agents to try to locate the debtor. Their enquiries start with the pre-tenancy references / application form and any other information you may have gleaned throughout the tenancy or from neighbours etc; the more background information that you can supply us with, the better.
The performance of our enquiry agents is regularly monitored and they will usually conduct their enquiries on a no trace no fee basis. Successful traces usually cost in the region of £36 to £50 plus VAT.
Unfortunately unless the debtor can be traced there is usually no further action that can be taken. However it might be worthwhile re-instructing enquiry agents after 3 months just in case they have re-established themselves in the meantime.
What is our next step?
The next issue is to establish that there are reasonable prospects for enforcing the money judgment. The existence of other unsatisfied money judgments might indicate that there is no real point in attempting to enforce your money judgment. However, provided these judgments were not obtained recently it might still be worth carrying out some further preliminary enquiries, after all just because one creditor has decided not to enforce their debt does not necessarily mean that your debt will not be paid. For example, your debtor's financial position may have changed since the other creditor investigated the prospect of enforcing their debt.
Ordinarily this could be done in one of two ways:
- Asking the enquiry agents to provide a status report indicating whether the debtor is working and, if so, for whom? This would usually cost an additional £36 to £45 plus VAT
- Applying to the court for an Order to obtain information from judgment debtors. This involves an initial court fee of £100 (including service on the tenant by the Court Bailiff of the application) and might involve meeting the debtor's expenses in getting to court. However, these costs are added to your money judgment
What is an Order to obtain information from a judgment debtor?
This is a further application which is made to the debtor’s local county court who will ask the debtor tenant detailed questions concerning their financial position (i.e. assets/liabilities income/expenses). The statement is sworn under oath and if you can establish that they have knowingly misled the court as to their true financial position they might have to show why they should not be imprisoned for contempt of court. The former tenant is also invited to put forward any proposals for payment (e.g. instalments).
How long could an Order take to complete?
Unfortunately there is often a delay of 6 weeks or more between requesting an Order and the actual hearing. Moreover it is not particularly unusual for the debtor to fail to attend the appointment. If this should occur the court will set a further hearing some 6 weeks or so later and warn the debtor that if they do not attend on the next occasion they will have to show cause as to why they should not be imprisoned for contempt of court. Needless to say most debtors will provide a sworn statement eventually - although the accuracy of the statement is often debatable.
Do you need to attend the hearing?
Although you can attend if you wish, most creditors choose not to unless they have particular reasons for doing so. This is because if a creditor has a particular question to ask, we can ask the court officer conducting the examination to do this on your behalf, provided we receive them at least 10 working days before the hearing. Please note, if the debtor has sworn a statement and you want further questions asked, you will have to re-apply and pay a further fee!
Now that I have established that there is some prospect of enforcing my judgment debt what are my options?
Given that most former tenants who have left outstanding debts do not own property (i.e. land, houses etc) and probably do not have the money sitting in a bank account, the vast majority of judgment debts obtained against former tenants are enforced through:-
- Voluntary instalment payments or
- Attachment of Earnings Orders (£175-£200 +VAT+ court fee) or
- Warrant of Execution / High Court Enforcement (£175 +VAT+ court fee)
The above methods of enforcement are not exhaustive but do represent the vast majority of our enforcements.
What happens if I cannot enforce the act immediately?
Generally speaking the debt will be enforceable for six years from the date it was obtained or six years from the date on which the former tenant last acknowledged his indebtedness or makes part payment.
Warrant of Execution
This authorises the county court bailiff or the high court bailiff to call at the debtor's home and remove goods owned by the debtor to discharge both the money judgment and the bailiff's own costs.
However, the bailiff cannot seize:
- tools, books, vehicles or other items or equipment needed by the debtor to carry out his employment or
- clothes, bedding, furniture and household equipment and provisions satisfying ‘basic domestic needs’
- cash or its equivalent
Moreover, the bailiff cannot force entry unless he is returning to seize goods that are held under a walking possession order (see later).
How does this work in practice?
Before the bailiff removes goods he will usually take ‘walking possession’ of the goods. This essentially allows the debtor a short period of time (typically five days or so) to pay the debt, failing which the goods are removed and sold at public auction. The debtor must agree not to remove the goods without the bailiff's consent otherwise the debtor is in contempt of court.
Unfortunately, the value of second hand goods at public auction is often very low.
Attachment of Earnings Order
Given that your former tenant has probably failed to pay on numerous occasions already, you might be reluctant to trust that the debtor will pay instalments regularly, or indeed at all. An attachment of earnings order is designed to enable you to recover instalment payments directly from the debtor's employer. However, generally speaking, this can only be achieved against debtors working on an employed basis (which excludes self- employed people), and only if the debtor fails to pay the ‘normal deduction rate’ (see later) voluntarily.
Unfortunately, some types of income are not subject to Attachment of Earnings Orders at all (e.g. money paid to members of Her Majesty's Armed Forces; social security payments and disability benefits).
How much will be debtor paid?
The court will investigate the debtor's circumstances and set a ‘Protected Earnings Rate’ which sets the minimum money the debtor should receive to keep him and his family and a ‘Normal Deduction Rate’ which is usually half of the balance (i.e. his salary / wages less the Protected Earnings Rate).
If the debtor fails to pay the Normal Deduction Rate the employer is required to deduct the money at source and send the money to the county court. However, the employer must ensure that the debtor receives at least the Protected Earnings Rate each week / month.
What happens if the debtor's income is already subject to an Attachment of Earnings Order?
The order will be consolidated with your order which will either increase the amount the debtor pays each week / month, or if that would exceed the Protected Earnings Rate, the payment is split by value.
e.g. If your debt is £2000 and their debt is £1000, you should receive £2 for every £1 they receive.
What happens if the debtor changes jobs?
The Order in place lapses. You may then need to locate the debtor and request a new Attachment of Earnings Order (i.e. possibly re-instruct enquiry agents and pay a further court fee).