An often-overlooked aspect of a County Court claim is that obtaining a judgment against a debtor does not automatically guarantee payment. Quite often Creditors will find that they are in possession of a Judgment, but the Debtor simply does not pay.
In these circumstances, the Creditor must consider further enforcement action, which can often be a tactical decision based on the known information about the Debtor’s circumstances and potential assets.
Sometimes, the Creditor will have information about the Debtor’s bank accounts. In this situation, they can consider a Third Party debt order which, if successful, would order the Third Party to pay to the Creditor any part of the debt held in an account in the Debtor’s name.
Lodging The Application
The process is commenced by lodging an application with the Court giving details of the judgment and the Debtor’s account. A fee is also payable, but this will be considered as being paid from the recoverable assets. The Court will then consider the matter on the papers and if they think there is merit in the application, they will then make an Interim Order without notice to the Debtor. They will also order a hearing to determine the final application.
The Interim Order must then be served on the Third Party, which is then ordered to freeze the accounts of the debtor and secure any amounts due to the Creditor held in the account on the date of service. They are not however, allowed to make payment until the hearing takes places. When serving the order, timing is crucial, as any amounts paid into the frozen accounts after the order is served will not be subject to the Interim Order, even if the full amount is not secured initially. The order must then be served on the Debtor ahead of the hearing.
At the hearing, which the Creditor must attend, a Judge will decide whether to finalise the order. It is for the Debtor to prove why the final order ought not to be made. If the Judge makes the final order, the Creditor will then be paid the amount secured by the Interim Order directly by the Third Party.
This enforcement tool can be effective if it is believed that the Debtor may store his assets in his bank accounts. Furthermore, the “without notice” nature of the Interim Order, means that the decision when to freeze the accounts, by serving the order on the Third Party, lies with the Creditor. This gives the Creditor the ability to wait until the Debtor is likely to have substantial assets available (for example following payment of salary or completion of a contract) before serving the order, this maximising their chances of success.
Get in Touch
If you have a Judgment and would like information on your options for enforcement, our Dispute Resolution Solicitor based in Reading, Chris Miller will be pleased to assist you. For more information, or to book an initial consultation for £95 including VAT, please call 01189589711 or e-mail Chris at [email protected].