Claiming Debts from a Debtor in another EU Country
Often businesses are put off claiming debts against persons or companies from another EU State because they assume it will just be too much hassle and too complicated.
Since 2008 the European Order for Payment (EOP) Procedure has provided a quick, easy and relatively cheap way of recovering uncontested monetary debts in cross-border cases.
How do I get an EOP?
It is quite simple, and in order to start off the process you need to complete Form A. The form is available on the European Commission’s website (http://ec.europa.eu/justice_home/judicalatlascivil/html/index_en.htm).
Within the form you need to give enough information to evidence your claim, e.g. details about outstanding invoices etc.
The Court will check to see that the form is properly completed, and if all is okay then you get an EOP and these are usually issued and served upon the debtor within 30 days.
What happens next?
The defendant may pay the amount due to you, do nothing or object to the EOP by completing a statement of opposition within 30 days.
If the debtor objects, then the case will normally be transferred to the national system of the Court issuing the proceedings. At this point you are probably best to seek legal advice.
If the defendant does nothing, then the EOP is immediately enforceable.
How do you enforce an EOP?
An EOP is treated the same as a Judgment by a Court of the MemberState when you are trying to enforce the claim. Rules about enforcement change from State to State. Information can be obtained from http://ec.europa.eu/civiljustice/index_en.htm.
If you need help in enforcing a cross-border debt then please contact Daven Naghen on 01775 722261, email@example.com or at 23 New Road, Spalding, Lincolnshire PE11 1DH or Gemma Mayer on 01775 722261, firstname.lastname@example.org or at 23 New Road, Spalding, Lincolnshire PE11 1DH.
A Brief Guide to Enforcing a Judgement
You may have got an Order from the Court for payment of a debt, damages and or costs, but how do you turn that piece of paper into actual money if the other party (“the Judgement Debtor”) does not pay up willingly?
In such circumstances you need to apply to the Court to enforce the Judgement. This is a brief guide to some of the main options that will be available to you:-
1. Oral examination
Often you have little or no knowledge as to the Judgement Debtor’s financial circumstances and his assets. Quite often the Judgement Debtor will not volunteer information to you such as employment details, bank details, properties owned etc. One option here is to summon the Judgement Debtor to Court for an oral examination. Here the Judgement Debtor will be questioned by a Court officer, and in certain circumstances a Judge, to find out more details about his needs. You can then use this information to decide the best method of enforcing the Judgement.
If a Judgement Debtor does not co-operate, i.e. does not turn up, then he can be sent to prison for contempt of Court.
However “streetwise” Judgement Debtor’s often omit to give information to the Court (i.e. fail to disclose certain bank accounts etc) and it is then very difficult to know or prove that such assets exist unless the Judgement Debtor is completely frank with the Court.
2. Writ of Fieri Fascias (“a Writ”) and Warrant of Execution (“a Warrant”)
A Judgement can be enforced by seizing goods belonging to the Judgement Debtor by obtaining a Writ (in the High Court) or a Warrant (in the County Court). The procedure is relatively straight forward and does not usually involve any Court Hearings. The Writ or Warrant will authorise a High Court enforcement officer or a bailiff to visit a Judgement Debtor and seize goods with a view to selling them to raise funds to pay your outstanding Judgement.
Quite often when a High Court enforcement officer or bailiff visits a Judgement Debtor, the Judgement Debtor will make a payment to prevent his goods being seized and sold.
Only a few goods are exempt from seizure, such as tools required by the Judgement Debtor in his employment/business.
Of course the success of a Writ or a Warrant depends upon the Judgement Debtor having goods of a sufficient value to meet the Judgement Debt after the sale costs have been deducted.
3. A Third Party Debt Order (“TPDO”)
A TPDO freezes sums owed to a Judgement Debtor that are in the control or possession of a third party, such as a bank. The Judgement Debtor cannot access money until the Court makes a decision about whether or not the money should be paid to the Judgement Debtor.
If the Court determines that some of all of the sums should be paid to you, then the third party (e.g. the bank) will be ordered to pay the sum to you directly. This is a very useful enforcement option if you know the Judgement Debtor’s bank details (for example obtained from an oral examination or from payment made previously to you). However to succeed there must be sufficient funds in the bank account at the time you apply for the TPDO or else you will receive little or nothing.
4. A Charging Order and Order for Sale
A Charging Order is a way of securing a Judgement by imposing a charge over the Judgement Debtor’s beneficial interest in land, securities or certain other assets. The Judgement Debtor then cannot sell the land etc without paying what is owed to you provided there is sufficient equity after payment of any prior creditors.
The Charging Order itself does not realise funds to pay the Judgement, it simply secures your Judgement against the land or asset in question.
To realise money you may need a sale of the property, which may not take place ordinarily for some time. An Order for Sale can be applied for, but they are difficult to obtain if say the Judgement Debtor is paying the debt in instalments, the debt is relatively small compared to the value of the charged asset and or other persons live in the property (such as the Judgement Debtor’s children etc).
This is a useful option if there is substantial equity in a property and the Judgement Debtor is a sole owner. However this method is less satisfactory where there is limited equity in the property or it is jointly owned as a family home.
5. An Attachment of Earnings Order (“AEO”)
This provides that a proportion of the Judgement Debtor’s earnings is deducted by his employer at source and paid to you until the Judgement is paid in full. It is only available against individuals in employment and who owe £50.00 or more. If the Judgement Debtor is unemployed, self employed or a company then this is not an option for you. AEO’s are relatively inexpensive and fairly easy to obtain, and the Court administers the deductions.
The Court will determine the sum to be deducted from the Judgement Debtor’s wages, and will take account of the Judgement Debtor’s necessary costs of living.
If an AEO is obtained and regular payments made then you cannot take any further enforcement action against the Judgement Debtor, such as a Writ or a Warrant or a Charging Order. Usually the other enforcement options can be used together to try and get full realisation of the sum owed to you.
6. Bankruptcy/Company Liquidation
If you are owed more than £750.00 you can apply to make the Judgement Debtor bankrupt if he is an individual or to wind up the Judgement Debtor if it is a company. Often the process is to issue and serve a Statutory Demand detailing the sum owed and giving the Judgement Debtor 21 days in which to pay. Usually this process is carried out without the need to obtain a Court Judgement.
If the Judgement Debtor does not pay or fails to set aside this statutory demand, then you can present a petition for the bankruptcy/winding up of the Judgement Debtor.
After bankruptcy/winding up, a trustee in bankruptcy or a liquidator will be appointed to collect in and distribute the Judgement Debtor’s assets amongst his creditors. Hence this can be an expensive and time consuming process, and may lead to zero or little recovery if there are secured and or preferential creditors and or little or no assets to pay significant debts. The threat of commencement of bankruptcy/winding up may lead to the Judgement Debtor making payment to you in order to avoid the risk of a bankruptcy/a winding up.
If you are currently having problems enforcing a Judgement of payment of a debt then please contact Daven Naghen on t or email email@example.com
Top 10 Tips for Debt Control
1. Check out your customer
Before conducting business with a customer get to know them to try and ensure that they will be credit worthy.
Collect evidence that your customer is who they say they are by getting copy utility bills or bank statements. Carry out credit checks, and insist on a payment up front if the credit rating is poor or questionable. Request trade references from their other suppliers, to see if they are paid promptly and in full.
2. Provide your Terms and Conditions
A well drafted set of terms and conditions can protect you in case of late or non-payment. You should ensure that the customer has these from the outset, and if possible get the customer to sign to acknowledge receipt and consent to them.
The terms and conditions should set out the maximum time allowed for payment (e.g. 30 days) together with a sanction for late payment (e.g. interest – include the rate also).
Occasionally a retention of title clause may prove handy, which states you retain ownership of the goods until paid for in full and that you retain the right to recover the goods if they do remain unpaid for.
3. Make it easy for the customer to pay
Give the customer all the information that they need in order to pay, e.g. your bank account and sort code, purchase order number etc. If possible have a variety of different payment methods available, such as direct bank transfer, card payment etc.
4. Set a Credit Limit
Do not allow customers to build up large credit limits, bill them regularly and or insist upon a payment up front or on account. Once you set a limit then stick to it, and don’t allow a customer anymore goods or services until your outstanding charges have been paid for.
In certain cases insist upon payment in full up front if for example you doubt the customer’s credit worthiness.
When dealing with limited companies it is also useful sometimes to obtain a personal guarantee for your fees from a director, so that he or she can be personally liable in the event of default by the company.
5. Submit invoices regularly
Invoice your customers regularly, so credit is not allowed to build up and to ensure so far as possible that you get paid on time.
6. Have a good Credit Control System
Keep track of invoices that are awaiting payment and those that have fallen overdue. Send reminder letters, and or call the customer to ask for payment or an explanation of the delay. Try to speak to the person responsible for actioning or authorising the payment, e.g. the accountant or financial director. Make sure you call at suitable times, i.e. not lunchtimes or too late in the day, so you “catch” the person. Monday mornings are often a good starting point!
7. Resolve problems and deal with excuses
Occasionally the customer will have a genuine issue that will need resolving before payment will be made, such as the goods are faulty or they are not happy with a certain aspect of your service. Try to resolve these as soon as possible to ensure that you get payment.
Often customers will use delaying tactics (i.e. excuses) e.g. not received an invoice, have sent a cheque in the post etc. Deal with excuses promptly, e.g. fax a copy of the invoice over to the customer and ring the customer to ensure receipt, ask for the cheque number and the date posted and check your post the following day.
8. Keep full records
It is important to keep a full log of telephone calls, correspondence etc, to help you make decisions, how to proceed and possibly to use as evidence at a later stage.
9. Stop the accounts
If payment is not forthcoming, stop providing the goods and or services until the account is brought up to date. This will at least limit the sums that you are owed.
10. If needs be take enforcement action and go to Court
Sending letters after letters demanding payment can be a wasted exercise, as the customer may think that this is just bluff. If you have not been paid and you have given the customer a reasonable opportunity to pay then if needs be commence legal proceedings promptly to maximise the prospects of recovery. Some times it may not be commercially appropriate to commence proceedings, and if you are in any doubt then speak to us!
If you do have any problems with customers relating to non-payment of your invoices, then please contact either Daven Naghen on 01775 722261 or firstname.lastname@example.org or contact Gemma Mayer on 01775 722261 or email@example.com
Enforcing a County Court Judgement (“CCJ”)
The most common method for trying to enforce a CCJ is by way of instruction of a CCB or HCEO to collect the outstanding debt either by collecting payment from the debtor or seizing and selling the debtor’s goods.
CCB or HCEO?
CCJ’s below £600.00 can only be enforced by a CCB through a Warrant of Control. Judgements between £600.00 and £5,000.00 can be enforced by either a CCB or HCEO. Judgements above £5,000.00 can only be enforced by a HCEO. To instruct a HCEO, the CCJ must be transferred to the High Court and a Writ of Control of obtained. Generally speaking HCEO’s are considered to be more effective at collecting debts that CCB’s. CCB’s are salaried civil servants employed directly by the Courts, whilst HCEO’s are private individuals/companies authorised by the Lord Chancellor and their profitability is often dependent upon high collection rates.
The Process of Enforcement
- Notice of a Visit
With either a Warrant of Control or a Writ of Control, the first stage in the process is for Notice of Enforcement to be given to the debtor. This must be at least 7 clear working days’ notice. Unfortunately this does give the debtor the opportunity to move goods “out of reach” and to prepare for the visit of the CCB or HCEO.
Obviously if the debtor pays in full within the period stipulated by the Notice, then enforcement is concluded.
- Attending the Debtor’s Address
If full payment is not made within the Notice period, a CCB or HCEO can attend the debtor’s address. The Warrant of Control or Writ of Control authorises the CCB or HCEO to take control of goods of the debtor which may be sold at auction to realise the debt.
Sometimes the debtor will pay in full or enter into a payment arrangement agreed with the creditor. Unless the debtor defaults here, the enforcement action will cease.
- Taking Control of or Removing Goods
If stage 2 above does not lead to a full realisation of the debt, then the CCB or HCEO may remove the debtor’s goods for sale or leave them securely at the debtor’s premises or at another secure premises until the debt is paid in full. The debtor is not allowed to remove or sell the goods if the latter occurs. If the sold goods do not cover the whole of the debt or the debtor breaks the terms of a payment arrangement, then the CCB or HCEO can return to the debtor’s premises.
- Sale/Disposal of the Goods
If goods need to be removed, then the debtor gets 7 clear day’s notice of a sale.
- Gaining Entry to Seize Goods
The CCB may enter via a normal means of entry that is either open or unlocked by opening without the use of force. Once entry has been gained, the CCB may force internal locked doors. The CCB can also enter if he has previously been allowed in and is returning to collect goods to be sold. CCB’s may use force to break into commercial premises, provided there are no residential premises attached. Similar rules apply to HCEO’s.
- Which Goods can be Seized?
There are a wide range of goods from within the debtor’s premises or on the highway that can be seized and include but are not limited to the following:-
(i) Vehicles, boats and aeroplanes.
(ii) Stock and machinery.
(iii) Computers and office equipment.
(iv) Household furniture.
(v) Jewellery and art.
(vi) Money, bank notes and cheques.
(vii) Bonds, shares, securities and deeds.
(viii) Livestock and animals.
(x) Jointly owned property.
(xi) Items held by the Police.
(xii) Goods on finance (provided the sale is agreed to by the finance company).
There are certain goods which cannot be seized which include the following:-
(i) Items which the debtor needs for his job or business, such as tradesman’s tools or books.
(ii) Essential household items which the debtor and his family needs such as clothing or bedding.
(iii) Goods which may have already been seized by enforcement agents acting under another Warrant or Writ.
In respect of exempt item (i) above, the exemption is permitted only to sole traders where the tools are used solely by the debtor for their work. They are not exempt if the debtor allows anyone else to use them, for example an apprentice or a spouse. Tools of the trade belonging to partnerships or limited companies are not exempt.
Where tools of the trade are deemed to be exempt, this is only up to the value of £1,350.00. Any tools belonging to a sole trader above that total value may now been seized by the CCB or HCEO.
In respect of jointly owned property, e.g. goods owned jointly with a spouse, these may be taken but if the item is subsequently sold then the co-owner will receive their proportion of the proceeds of sale according to their interest. The co-owner will obviously need to provide proof of their portion of ownership.
- Can the Debtor apply to the Court to stop Enforcement
The debtor may make the following applications to the Court:-
(i) To request that the CCJ be set aside or varied.
(ii) To appeal the CCJ.
(iii) To request that the Warrant be suspended or the Writ be stayed.
With any application the debtor will have to provide a good reason for his application and also provide strong supporting evidence. Any application for any of the above by a debtor will not stop enforcement. Enforcement may proceed until the Court rules in the debtor’s favour.
However a bankruptcy petition or a company winding-up petition will stay execution. As soon as the CCB or HCEO is made aware that the Warrant or Writ has been suspended or stayed, then enforcement must stop.
If you need advice about collection of a CCJ then please contact Daven Naghen on 01775 72261 or email firstname.lastname@example.org or arrange an appointment or visit us at our offices at 23 New Road Spalding Lincolnshire PE11 1DH.