Converting debt to £££

ller debts, however it can take a long time to pay of larger debts with this method. Furthermore, the rate of payments is set based on the level of income of the debtor and so if he or she is in a low paying job you may not receive a significant monthly sum. You can obtain an attachment of earnings order after you have secured the debt with a charging order and so this may be an effective way to ensure you receive at least some payments while knowing your debt is secured against a valuable asset and will be paid in full if this is sold.

You may be able to freeze money due to the debtor which is in the hands of a third party, for example a bank or a customer of the debtor. This money can then be seized to repay the judgment debt owed to you. This is known as a third party debt order and can be a very effective way of enforcing a judgment if you have the relevant information, for example the debtor’s bank details. Often creditors do not enforce in this manner because they do not have enough information, however something as simple as retaining the bank details of a customer who has previously made a payment to you could provide you with an effective enforcement tool.

It is possible to take possession of certain goods belonging to a debtor by obtaining a warrant or writ of control. Warrants and writs have the same basic effect of giving a creditor the right to take control of the debtor’s possessions and the only difference is that a writ of control is obtained where the debt is above £5,000.00 and must be sought in the High Court. The recent reforms mentioned above have made the process for taking possession of goods a lot clearer and provide a simpler fee structure which is beneficial to creditors. If you know that a debtor has goods you can obtain a warrant or a writ relatively quickly and this will command an enforcement officer to attend the debtor’s property, seize the goods and sell them to pay off the debt. Certain goods are exempt, for example goods used in the course of business and other basic household goods such as fridges, cookers and washing machines.

These enforcement methods are a few options available to a creditor with a unpaid judgment, however there are others. There is of course the option of making a debtor bankrupt if he or she is an individual and the debt is greater than £750.00. If the debtor is a company you can also seek to wind up the company. However, these are costly routes and may result in you receiving a fraction of the amount you are owed or, in some cases, nothing at all. What is important to bear in mind is having a strategy from the outset and an idea of which enforcement method is best suited to the debtor. Information about the debtor is crucial and in order to formulate a strategy it is advisable to collate as much information about the debtor as possible. This can be done from a very early stage. For example, simply ensuring you have a home address for an individual debtor will enable investigation into whether or not he or she is a home owner. Obtaining this information, details about their employment status and their bank details can, in some circumstances, be done at the beginning of the customer relationship under the guise of creating an “engagement record”. Alternatively, something we routinely recommend in debt recovery matters is a pre-action investigation. However, if you have not collated much information about your debtors from an early stage all is not lost, you can still obtain an order from the court compelling the debtor to attend court and answer questions about his or her finances. In the case of a company debtor you can compel a director to attend and give information about the company’s finances.

Encountering bad payers is an inevitability of business but that does not mean your company should suffer. Implement a clear and effective credit control policy with strategies tailored to your debtors and you will minimise the bad debt on your books, improve your cash flow and in the long term may transform your business from one that simply survives to one that thrives.

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