Debt Enforcement – You have options!
As a Creditor you have options after getting a debt judgment.
- Register Judgment in High Court Central Office – leads to publication of the debt. This threat to a Debtor’s credit rating may be enough, however, it has no real effect if the Debtor is a failing business.
- Register Judgment Mortgage – this is useful where the Debtor has property. It ensures Creditor priority above unsecured creditors, but is ineffective where Debtor already has fully secured property with a lender.
- Execution Orders/Fieri Facias/Sheriff – Once an Execution Order is obtained it is sent to the sheriff to enforce. This is of no use unless the Debtor has viable goods that the sheriff can get his hands on and sell.
- Installment and Committal Orders – If the Creditor gets an Installment Order and the Debtor fails to pay, the Creditor can apply to the District Court for a Committal Order. Since the Enforcement of Court Orders (Amendment) Act 2009 a Creditor must show the Debtor willfully refuses to pay and has no goods before a judge can order committal.
- Attachment of Debts (Garnishee Orders) – Where a Debtor has no assets to pay, but is owed by a third party, then Judgment Creditors can apply to court for an order directing the third party to bypass the Debtor and pay the Creditor directly.
- Receiver by way of Equitable Execution – An expensive process whereby a Judgment Creditor applies to the court for an order appointing them Receiver over the Debtor’s assets. This allows them to collect money due to the Debtor from a third party. However, the Receiver has no power to pursue the third party and must seek further directions from the court upon receiving the payment.
- Order Charging Stocks and Shares – Allows Creditor to apply to the court for an order charging the stocks and shares owned by the Debtor.
- Order Charging a Partner’s Interest – Under the Partnership Act this allows the Creditor to obtain an order to charge the partners interest in the business to the payment of the debt due.
- Bankruptcy – Very much a last resort, as it gives the Creditor no priority over other creditors, with rules of preference being similar to Liquidation or Receiverships. A court will not grant Bankruptcy Order until it is shown that all other methods were unsuccessful.
- Private Arrangements by Debtor under Court Control – Debtors can apply themselves to court to halt various enforcements and seek individual protection. The Debtor must present a scheme to the Court and the Creditors must vote to pass it.
- Winding Up Companies – Once a Creditor can prove insolvency, orders for Liquidation or Receivership can be obtained. Usually this is preceded by an examinership application by the Company. This is also a last resort for a Creditor, as it gains no priority for the Creditor and cannot guarantee payment in the long run.
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