Understanding CCJs and Enforcement Options
Many business owners assume that once a legal claim has been issued and a County Court Judgment (CCJ) is obtained, the debt will be paid automatically. However, while a CCJ marks an important legal milestone, it does not guarantee payment and this is where enforcement becomes crucial.
What Is a County Court Judgment (CCJ)?
A CCJ is a Court order that formally confirms that the amount of the judgment debt is owed by the debtor. It establishes your legal entitlement to payment of the debt and is recorded against the debtor’s credit record, often affecting their ability to obtain credit in the future.
Obtaining a CCJ is often the next step when an overdue invoice remains outstanding after pre-action steps and the issue of a Court claim.
Key Enforcement Methods After a CCJ
Once a CCJ has been entered against a debtor, a number of enforcement routes become available. Each route has different strengths and can be tailored to suit each debtors circumstances – which is why experienced advice is valuable.
1. High Court Enforcement Officers (HCEOs)
High Court Enforcement Officers are often the preferred method for enforcing CCJs where the debt exceeds £600 (and where the debt is not regulated under certain consumer legislation). They are incentivised to collect the debt and can take more robust action, including attending the debtor’s premises and, in some cases, forcing entry to recover assets.
2. County Court Bailiffs
County Court bailiffs can also visit the debtor’s premises and attempt to recover the outstanding judgment debt — they can also seize certain goods to satisfy the debt. This option can be used for debts under £600 or subject to consumer legislation. This can be an appropriate method of enforcement for certain CCJs and is another practical way to exert pressure when informal communication fails.
3. Attachment of Earnings Orders
If the debtor is an individual with regular employment, an Attachment of Earnings Order can be sought. This means deductions are taken directly from their wages by their employer to satisfy the judgment amount. This option is not available where the debtor is self-employed.
4. Charging Orders
Where the debtor owns property, a Charging Order can be used to secure the debt against that property. This does not force immediate payment but creates a legal charge that must be settled when the property is sold. This may be a suitable option where the debtor’s circumstances mean that they are unable to access sufficient cash to pay the debt in full or the debt is significant and the debtor wishes to pay by instalments and you wish to secure the debt.
If the debt is of a significant sum and there is sufficient equity in the property you may be able to consider an order for sale in some circumstances after a final charging order has been secured over the property.
5. Third Party Debt Orders
A Third Party Debt Order can be used to freeze funds owed to the debtor, such as money held in bank accounts or by third parties, before the debtor is even notified. This gives a strategic advantage by reducing the debtor’s ability to dissipate funds and the Court can order the third party to pay funds directly from the debtor’s account.
6. Winding-Up Petitions or Bankruptcy
In certain situations, issuing a winding-up petition (for companies) or bankruptcy proceedings (for individuals) may be appropriate if the debtor is genuinely unable to pay their debts as and when they fall due. These are more serious options and require careful consideration. This option is only available where there is no dispute and can be used both before and after obtaining a CCJ.
Choosing the Right Enforcement Route
There is no one-size-fits-all enforcement strategy – the best course of action depends on the debtor’s circumstances, the size of the debt and commercial considerations. For example, while High Court Enforcement Officers can be very useful as they will make direct contact with the debtor at their home (individuals) or at their offices (companies) and can quickly obtain information about the debtor’s circumstances that will help with enforcement. However, they may not be suitable for smaller debts where other options might be proportionate.
At Lovetts our legal team can assist and assess each case individually to help you decide the most appropriate enforcement method based on experience with similar situations. This tailored approach helps you to find the most cost effective and expedient way to enforce a CCJ and protect cashflow.