Various methods of enforcement can be used to enforce a money judgment. A judgment creditor can use any method available (and several methods can be used simultaneously or one after the other) except where the law provides otherwise. Insolvency procedures, although not strictly an enforcement method, are often used to enforce judgments.
The following paragraphs provide a summary of the various enforcement methods available.
Instructing bailiffs to seize and sell goods owned by the debtor in order to pay the debt. This is a very popular method of enforcing a judgment debt as it can be done quickly. It requires the issue of a court document (in the High Court, a writ of control and in the County Court, a warrant of control), which commands a High Court enforcement officer, County Court bailiff or another enforcement agent to take control of and sell a judgment debtor’s goods to raise funds to satisfy the judgment debt. The success of this enforcement method depends on the judgment debtor having goods of sufficient value.
Obtaining a third party debt order whereby you can seize sums owed to the debtor that are in the hands of a third party. For example, monies held in a bank account can be paid to the judgment creditor as opposed to the debtor. Third-party debt orders are not the most popular method of enforcement, as they depend on there being third-party debt. However, they can be useful where the judgment creditor knows that there is a bank account which is holding money belonging to the judgment debtor.
Obtaining a charging order. A charging order is a way of securing a judgment debt by imposing a charge over a debtor’s beneficial interest in land, securities or certain other assets. This usually prevents the judgment debtor from selling the land without paying what is owed to the judgment creditor, provided that there is enough equity after payment of prior creditors. An application for a charging order calls for the court to exercise discretion, and the court will therefore be looking to see that this enforcement method is appropriate. Therefore, the court may not choose to secure a small judgment when it could be enforced by another method. A charging order is most effective when there is substantial equity in a property, and the judgment debtor is the sole owner. The process for obtaining a charging order can be slow. A charging order itself does not realise funds to satisfy a judgment debt as that requires a sale of the property, which does not automatically flow from obtaining a charging order. The judgment creditor would have to subsequently apply for an order for sale of the property, or simply await the sale of the property by the owners, or following an order obtained by another creditor. Applying for a charging order over other assets, such as shares, is possible but is much less common.
Applying for the debtor to be made bankrupt or wound-up. If a judgment has been obtained against a sole trader, which is £5,000 or more, it is possible to apply for the sole trader to be made bankrupt. Judgment creditors can also apply for a company to be wound-up if it owes more than £750. Before issuing a bankruptcy petition, a statutory demand must be served on the debtor, giving the debtor 21 days to pay the debt or 18 days to apply to the court to set the statutory demand aside. While it is not necessary to serve a statutory demand on a company prior to issuing a winding-up petition, serving a statutory demand may make it easier to obtain a winding-up order from the court. After a bankruptcy or winding-up order is made, the debtor’s assets are then collected by a trustee in bankruptcy or liquidator and distributed amongst all creditors in accordance with insolvency law. A note of caution: bankruptcy and winding-up proceedings are expensive and time-consuming and may not ultimately lead to any recovery depending on how many assets and debts the debtor has. The threat of insolvency can sometimes lead to judgment debtors making payment, but the courts discourage using insolvency procedures as a debt collection exercise. The courts can dismiss bankruptcy or winding-up petitions and also penalise judgment creditors in costs if the debt is genuinely disputed or if the debtor has a genuine cross-claim or right of set-off.
Appointing a receiver. This is a relatively unusual method for the enforcement of a judgment. The court has the power to appoint a receiver in all cases in which it appears to the court to be just and convenient to do so. Equitable execution is usually only available where other methods of enforcement are unavailable. A receiver is usually appointed to assist in the preservation or gathering of property. A receiver may be authorised to receive rents, profits and other amounts of money due to the debtor and to apply that income in specified ways, including the payment of a judgment debt.
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