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            Strategic thinking on debt enforcement

            Date: 16 February 2017

            Date: 16/02/2017

            Einstein is often attributed as saying: ‘The definition of insanity is doing something over and over again and expecting a different result’. If the old adage is true then maybe some civil court users should take heed!

            The latest quarterly Civil Justice Statistics show the most common method of enforcing a monetary judgment is applying for a Warrant of Control. The number of Warrants of Control issued per quarter has recently increased by around 4% compared to the same quarter last year – if replicated over the course of the year, this would translate to an eye-watering 309,688 Warrants.

            As Paul Rock noted in his systematic description of the debt-collection process in England Making People Pay, ignorance is playing a significant role:

            ‘In part, [creditors’] choice of weapons is constrained by their ignorance of the debtor and their unwillingness to devote time, thought or money to enforcement …’

            So what do we know?

            First and foremost, Nicola Dominy and Elaine Kempson’s Can’t Pay or Won’t Pay remains a useful tool in deciding which debtors it is appropriate to take to Court. 

            Second and when you have a Judgment or Order, let me share some of DWF’s strategic thinking surrounding enforcement:

            • Orders to Obtain Information: You can apply to the Court for an Order requiring an officer of a debtor company (or a debtor in person) to attend Court to provide information about their means and/or on any other matter needed to enforce the judgment or order.  What is in Forms EX140 and EX141 though and what may be missing (including parties to the claim)?  Warrants of Control:  The County Court Bailiff clearly still has a place, particularly in the consumer environment.  The Part Warrant, being where a Warrant is issued for part of a Judgment or Order, can be an effective tool in encouraging engagement to pay off a more manageable sum initially and then getting debtors to engage in future arrangements – this is a ‘behavioural approach’ to debtor management.
            • Writs of Control: Where a Judgment or Order for unregulated debt is between £600 and £5,000, creditors have the choice of either issuing a Warrant in the County Court or transferring to the High Court.  Court fees for a Warrant are £110 whereas for a Writ is £66; even accounting for the fixed costs allowed for legal representatives the difference in cost for issue is nominal but in service it’s significant – a real “no brainer”.  Find the best partners you can in the High Court Enforcement market and integrate virtually with them, utilising “overnight updates” to your records and instant access to experienced HCEO’s and Enforcement Agents.
            • Third Party Debt Order: You can also apply to enforce your debt directly against third parties who owe your debtor money, i.e. financial institutions.  With most people opting to only bank with a single financial institute, a credit professional can easily “hit the jackpot” with those debtors who have clearly got money in their account and are still not paying their creditors.
            • Charging Order: Securing a charge against a debtor’s property only provides security against whatever equity is in the property, which inevitably fluctuates from time-to-time.  Although vast swathes of Charging Orders are regularly secured by and on behalf of creditors, creditors often do little to enforce and translate these securities into recoveries efficiently and yet the Courts are often sympathetic to creditors in demonstrable cases of ‘contumelious neglect’ or refusal to pay where, without sale, it is clear that the debt will not be paid off.
            • Attachment of Earnings Order: If the debtor is a person in employment then it may be possible to obtain an order to deduct money directly from their wages, with the Court to decide the amount of any deduction based upon the debtor’s means. 

            Beyond that, the strategic use of insolvency, as discussed in our last article, remains one of the most effective ways of recovering funds quickly from a debtor who is solvent but unwilling to pay their debt.

            You need to consider which method of enforcement or insolvency is more likely to achieve success.  When it comes to Warrants and, as my own personal Einstein, Obi-Wan Kenobi, said: ‘Who’s the more foolish: the fool or the fool who follows him?’

            Jeffersen Gledhill is Legal Recoveries and Operations Manager at leading law firm DWF and has many years of experience as a legal debt recovery professional.  

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