Enforcement: The hidden part of litigation
Tuesday, May 22, 2018
Imagine the scenario. You’ve reached the end of the litigation process. You are due a significant amount from the defendant or, quite possibly, you are due all of your legal costs from the claimant. However, what happens when the claimant or the defendant will not pay?
Imagine the scenario. You’ve reached the end of the litigation process. It’s been a long journey. You’ve successfully pursued or, possibly even, defended a claim. Now for the money. You are due a significant amount from the defendant or, quite possibly, you are due all of your legal costs from the claimant. However, what happens when the claimant or the defendant will not pay? More often than not, at the end of litigation, the losers simply don’t pay and won’t co-operate.
In many cases, the person owed money is not able to make a claim on the property or valuable assets of the person who is supposed to pay up. So what next? How do you obtain the money owed? Thankfully, there are several legal routes and options:
Send in High Court Enforcement agents.
Enforcement agents have been popularised by TV shows such as “Can’t pay? We’ll take it away” and “The Sheriffs Are Coming.” They are real and can be a valuable way of extracting money owed. After they obtain a writ from the court, they can turn up to the premises of the debtor and proceed to seize goods to the value of the debt. A fee is charged which is recovered from the debtor.
Obtain a Third Party Debt Order.
If you know the bank details of the debtor, you can apply for a Third Party Debt Order. On receipt of the order, the bank is obliged to freeze funds in the account to the amount owed. If there is not enough in the account to pay the debt, all the funds are frozen. A hearing is then held so a judge can decide whether the bank should pay the amount owed.
Obtain an attachment of earnings order.
This does what it says on the tin. You can make an application to the court for what is called an attachment of earnings order. If this application is granted, the court can order the employer of a debtor to pay you out of the debtor’s wages.
Obtain a charging order.
If the debtor does has equity in his or her property, you can apply to the court to obtain what is called a charge on that property. This would mean that if the property was ever sold in the future, the debtor would be forced to pay the amount owed under the charge before they received anything from the proceeds of sale.
Instigate bankruptcy proceedings against an individual or take a Company into insolvency.
Last but not least, the ‘nuclear’ option. Both routes involve a long process, either via bankruptcy or insolvency procedures, which will bankrupt the person or wind up the company they own. One point to note, there may be other creditors who are owed money by the debtor. Those debtors may rank higher that you under the insolvency rules detailing whose debt gets paid first. So you may receive less than the amount you are owed or, in some cases, nothing at all.
If you have money owed after a litigation battle, seek legal advice to explore all the available options and the processes you need to go through in order to take the most appropriate way forward to secure the debt you are owed.