CHARGING ORDERS

On 1st October 2012 S93 of the Tribunals Courts and Enforcement Act 2007 came into force.  This means that irrespective of whether your debtor has an instalment order in place and is maintaining payments, you can know secure the debt by obtaining a Charging Order against the debtors property.

If you have a debtor that is asset rich but cash poor, this means that they can no longer offer token payments while selling assets without obligation to utilise the proceeds of sale to discharge your debt. 

What is important is to know your debtor, retain details of assets such as stocks and shares, houses, holiday homes and plots of land.

If you have a Judgment which is being maintained with token payments, but you are aware that the debtor has assets.  give Mercian Law a call on 0800 048 8799 to discuss if a Charging Order is appropriate for you.

OUR TOP REASONS WHY JUDGMENTS REMAIN UNPAID

As a creditor, obtaining a County Court Judgment against a debtor, involves you receiving a piece of paper from the Court stating that your debtor owes you a fixed amount of money, which is usually a combination of an invoice balance, interest along with court and legal costs. 

Obtaining your Judgment doesn’t always result in the debtor making payment.  It is the start of the enforcement journey.  Mercian Law regularly advises on the enforcement options available, and we have found that certain situations reoccur when a creditor is having difficulties recovering payment of a Judgment.  These are:

1. The debtor has petitioned for Bankruptcy (individual) or Voluntary Liquidation (Company).  This stops any recovery attempts in its tracks, as all creditors are legally prohibited from taking further recovery action.  Mercian Law still recommends that creditors complete the proof of debt forms to register their debts, as on the very rare occasion a small distribution of payment is made to creditors.
2. The debtor passes away, which is something that happens and isn’t always foreseeable.  Creditors need to ascertain who the executors are to the debtor’s estate and provide them with a copy of the Judgment.  However, if the debtor died with a lot a debt, and little assets, the creditor will not get paid.  It may sound hard, but if you have been made aware of a debtors health issues, try and find out who is taking responsibility for the debtors financial affairs.
3. The debtor is a ‘professional debtor’ with experience of hiding assets and becomes impossible to locate, sometimes having many alias names, making recovery very difficult but not always impossible.  With the explosion of social media, the internet can be a very useful resource in tracking debtors.
4. The debtor is ‘a man of straw’, and has no assets or income for you to recover against.  Mercian Law recommends that all new customers or those with an unproven credit history should be asked to either pay on account, or only given a very small amount of credit, which will limit your exposure, should payment not be forthcoming.
5. The debtor moves outside the UK.  It then becomes very expensive to transfer enforcement to another jurisdiction.  In our experience Southern Ireland residents can be particularly difficult to pursue.
6. The debtor suffers with a health complaint or disability and loses their ability to work.  As a result their financial position deteriorates and it can be a very long time, if at all, before the position improves.  Creditors should review the position annually with the debtor, as a Judgment can be enforced for up to six years.
7. The debtor could apply to Set Aside the Judgment.  They have to prove that they have a viable Defence to the Claim and make the Application is good time.   Mercian Law will be happy to advise you on the prospects of success for such an Application.
8. The debtor may have many Judgments against them already and all assets long since gone.  Mercian Law recommends that you obtain a credit report not only when you enter into a relationship with a customer, but that you monitor the customer’s financial stability throughout the course of your relationship with them, as you can see things can change at the flick of a switch.  The more information you have about a debtor the more likely you are to be at the front of the queue if they encounter financial difficulties.

Do you have other situations like these to add to our list?

Charging Orders

We have added a FREE PDF download onto the Mercian Law website, about enforcing a CCJ with a Charging Order.  Take a look and let us have your comments.

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