Top Tips for Enforcing your CCJ
Customer on-boarding – think ahead! Make sure you have enough information when opening your customer accounts. i.e. details of any property they own, where they live, contact details etc.
By Kalpesh Patel, Debt Collection Legal Executive with Wright Hassall LLP.
When on-boarding a new customer, it’s easy to jump straight into trading without gaining the vital information necessary to protect you should they ever become bad payers. Having a strong process to confirm who you are trading with and their potential assets, could save you a lot of money and headache further down the line!
When trading with a company, it is essential that you are aware of the legal entity (i.e. a company, sole trader, partnership etc) you are doing business with. Numerous companies ‘trade as’ a marketing or brand name and have a completely different legal name. We suggest requesting the company registration number during the on-boarding process. This is a unique number issued by Companies House when a limited company or Limited Liability Partnership (LLP) is incorporated. This unique number will allow you to establish who you are trading with and who you should be invoicing, which will be extremely useful in the event that you are required to take them to Court for non-payment.
Making a note of your customers assets is also crucial, especially if you are lending money. We would suggest requesting information in relation to homeownership, vehicles, machinery etc. Even ensuring that your contact details for the customer are up to date can save you time and money in tracing the customer later down the line.
Taking your non-paying customers to Court and obtaining a CCJ is only half the battle. Often you will need to take steps to enforce the Judgment to obtain payment. Once Judgment is obtained, act quickly – timing is everything! Often non-paying customers will have several creditors. You need to get in there first before other creditors and make payment of your debt a priority for the Debtor!
There are many options when it comes to enforcing your CCJ. However, in all circumstances we would recommend acting quickly. If your debtor is concerned with their credit rating being tarnished, one option is to remind them that if the CCJ is paid within one calendar month it will be removed from the Register of Judgments by the court, meaning that it will not appear on their credit report. This can often be enough to promote payment in full.
However, if the threat of a bad credit rating is not enough to encourage payment of your CCJ, there are many enforcement options available to you.
Writ of Control
One option available to you when enforcing your CCJ, is obtaining a Writ of Control. If the CCJ exceeds £600, instructing High Court Enforcement Officers (“HCEO”) can be extremely effective. The HCEO are private officers who are instructed to attend your debtor’s property and seize assets to the value of the CCJ. This is where your customer knowledge from the on-boarding process will come in handy i.e. potential assets the HCEO can seize. The HCEO have more enforcement powers than court bailiffs and get paid based on their collections. It has become apparent from our previous successes with this approach that just a visit from a HCEO along with the threat of taking control of goods, will often results in full payment or a payment plan being offered in circumstances where debtors have otherwise ignored all correspondence.
Even if your CCJ is being repaid by monthly instalments, you are still within your rights to secure the CCJ by way of a Charging Order (if your debtor owns a property). A Charging Order secures the CCJ against the debtor’s property meaning that if the debtor attempts to re-mortgage or sell their property, you will be informed. Obtaining a Charging Order would also mean that you are classed as a secured creditor in the event that your debtor become insolvent. Another point to note is that a Charging Order can be obtained in conjunction with another enforcement option, therefore we would strongly recommend this option in the first instance if you are aware that your debtor is a homeowner to ensure that your charge is registered prior to any other creditors.
We would strongly recommend instructing solicitors to obtain a Charging Order. There are several important steps that need to be followed correctly and within the necessary timeframes including an application to the Land Registry. If an error is made at any stage of the Charging Order process, there is a risk that the Charging Order application be dismissed or that your debt is not secured against the property.
Attachment of Earnings
If your debtor is an individual it can be difficult to pursue your CCJ due to the restrictions put in place to protect individuals. However, an Attachment of Earnings takes the repayment responsibility away from the debtor and allows for deductions to be taken from their salary to repay the CCJ. We have found on numerous occasions that debtors are more inclined to begin repayments directly with us when they are faced with the risk of their employers being contacted regarding their debt.
Take legal advice
Pursuing your unpaid invoices through your own credit control process will generate payment from a lot of non-paying clients, however with the more difficult debts, instructing a specialist debt recovery firm confirms to your debtors that you are serious and willing to pursue them for the money you are owed. With debtor’s that are experiencing cash flow problems and so juggling invoices month to month, instructing a third party to pursue the debt, will often ensure your invoice is higher on their priority list.
When enforcing your CCJ, we would strongly recommend that you obtain legal advice.