Rent Arrears Recovery – Stage 3
Third Party Debt Order : £85 exclusive of Court Fee
An application is made to the Court for an Order that the tenant’s bank or building society (the third party) pay the Judgment debt. An Interim Order is obtained and served upon the tenant’s bank. The effect of this is to freeze the tenant’s account up to the amount of the Judgement pending a Court Hearing to decide the matter.
At the Hearing, you and the tenant can make representations. The Court may make an Order granting the application and the bank will pay out the money ordered. The timing of the service of the Interim Order on the tenant’s bank is often a crucial factor in determining the success of this method of enforcement.
Attachment of Earnings Order: £95 exclusive of Court Fee
If your tenant is an employee of a company and receives a regular wage, we can apply to the Court for an Order that the Judgment debt owed to you should be deducted from your tenant’s wages. This means that the tenant’s employer will pay you a percentage of your tenant’s wages each time your tenant gets paid, whether this is weekly, monthly or at any other interval.
An application is made to the Court for an Attachment of Earnings Order. A Hearing date is set at which both sides can make representations. The Judge will decide whether or not to make an Order as well as the amount of money to be deducted. The Judge will take into account factors such as how much the tenant requires to pay rent and buy food. In practice, depending on the size of the debt and the salary of the tenant, it could take many months or even years until the Judgment debt is satisfied in full.
Charging Order: £395 inclusive of Court fees and Land Registry fees
An application is made to the County Court to have a charge placed over your tenant’s property. The tenant must be the sole or joint proprietor of a property in England and Wales. Initially, the Court will grant an Interim Charging Order, upon receipt of which we will immediately make an Application to the Land Registry to have the charge registered against the property. The effect of this is to ensure that the tenant cannot sell or otherwise dispose of his or her property without satisfying your charge.
It is essential that the property is owned in whole or in part by the tenant in his or her individual name and not in a company name. The Court will not grant the Interim Charging Order unless the name on the Judgment and the name on the Official Copies of the property in question are identical.
The Court will set a date for a Hearing to decide whether or not the Interim Order should be made final. In the vast majority of cases, the charge is made final at the Hearing. Some courts have recently dispensed with the need for representation at this Hearing. The Final Charging Order is made the subject of another separate application to the Land Registry, who in turn will register the charge against the property.
If the tenant does not satisfy the Judgment in spite of the charge registered against his property, we can apply to the Court for an Order for Sale over the property. If the property is mortgaged, the bank or building society will have a first charge over the property and they will be paid out first from the proceeds of sale. In practice, an Order for Sale is rarely actually made as the Court takes into account many factors before making such an Order. However, in many circumstances the debtor will come up with the funds needed to satisfy the debt at some stage in the process.
Warrant of Execution: £90 exclusive of Court Fee
This is a request for the County Court bailiff to attend at the tenant’s premises to seize and sell the tenant’s belongings at auction. The money raised (less the auctioneer’s fees) will be paid back to you. If the Judgment debt is more than £5,000 the warrant must be enforced in the High Court.
The bailiff cannot force entry into a residential property. However, if a window is left open or the door is unlocked, he can enter the premises under the Warrant. The bailiff cannot seize essential items such as clothing or bedding, nor can he seize any item that is leased from a third party.
In many instances, the tenant will pay off the arrears once the bailiff actually turns up on their doorstep.
There are other means of enforcement available such as Oral Examination and Warrant of Delivery. These methods are not always an effective way to recover your money.
Statutory Demand: £295 including personal service of the Demand
An alternative method to recover a debt or enforce a Judgment is to serve a Statutory Demand on your debtor. The procedure is governed by law and applies to any debt in excess of £750. It gives the debtor 21 days in which to pay your debt inclusive of interest and our fees, failing which we can apply to the Court to wind up the debtor company or bankrupt the individual debtor.
In the vast majority of cases, the service of the Statutory Demand will convince your debtor to settle the debt immediately. Therefore, this method of enforcement is often the preferred choice for many creditors, particularly if the debt can be easily substantiated, in which case the debtor is unlikely to dispute his liability. Conversely, if a Statutory Demand is served on a debtor for a debt that cannot be substantiated at the Court hearing, the Court Registrar has the ability to make an award that the creditor pay all the debtor’s costs of ‘setting aside’ the Statutory Demand.
Although the Statutory Demand can be validly served if sent by post, we would always recommend personal service into the hand of the debtor, as this eliminates the option for the wily debtor to claim that he never received the Statutory Demand. This can sometimes involve attending at the debtor’s address up to three times before achieving service.
We can assist you in deciding upon the merits or otherwise of serving a Statutory Demand based on the particular circumstances of your case. We can also carry out credit checks against your debtor so as to ascertain how damaging and threatening a Statutory Demand may impact on his personal assets, business or reputation.
If you require any of the above services please contact us for further details.