How Do I Enforce a Payment for My Business in England and Wales?

If you are an owner of a business, you will want to make sure that you have ways to enforce a payment from your business’ customers to ensure you get paid on time. There are different ways to do this, for example by: 

• asking a court to make an order for payment; 
• sending an enforcement agent or bailiffs to collect payment; or 
• requesting payment yourself. 

This article will outline some of the different options you have to enforce a payment and when it is a good idea to use them.

What Should I Do First?

The first thing to do is to consider your position regarding litigation. Litigation is when you take a party to court, and a court judgment resolves the dispute between you and the other party. Usually, ‘enforcement’ refers to the process of recovering money that a court, in its judgment, ordered a debtor to pay. 

Before you look into enforcement rules, you should know exactly how much the other party owes you. Additionally, you should know if the judge decided the case in your favour. 

What if a Court Makes a Judgment in My Favour?

If a court makes a judgment in your favour, then you have a range of options available to you, including enforcing court orders. The first thing you should do is check how much the debtor can pay you. One way of doing this is to ask the court to make a court order against the debtor, where the debtor has to appear in court and show their financial situation. 

The debtor will have to provide a breakdown of their money, including their income and outgoings, alongside financial statements and bills. 

Using a Bailiff or Enforcement Agent

If you decide to enforce the debt, you can ask the court to send a bailiff to collect the money. This is called a ‘warrant of control’, and this option is available if they owe you between £600 and £5000. 

The bailiff will contact the debtor and ask for payment to be made within seven days. Suppose they do not make the payment. In that case, the bailiff will go to the debtor’s home to see if they can sell anything there to pay the debt. 

Attachment of Earnings

Another option you can explore is ‘attachment of earnings’. An attachment of earnings is where you take money from the debtor’s salary to pay the debt. The court will do this by sending an order to the debtor’s employer. This approach can be a good way of recovering payment if the debtor receives regular payments from their employer. Further, it is particularly useful if the debtor is an individual who owes you a smaller amount of debt.

Freezing Assets

Alternatively, you can ask the court to freeze the debtor’s assets as part of their bank account or their business. This is called a third-party debt order. It is a good way to get hold of a debtor’s money if it is held in a bank account or by a third party. 

Insolvency Proceedings

If nothing else works, you can serve a winding up order to the debtor. They will then have to liquidate their assets and may become insolvent if they cannot pay their debts. If the debtor goes into insolvency, the proceeds from the sale of their assets will be divided between all of their creditors. 

Key Takeaways

If you have recently received a court judgment in your favour and are looking to enforce payment, there are various options at your disposal. Before asking for a court action to enforce payment, you will want to check the debtor’s financial situation. After this, you can consider: 

• using a bailiff or enforcement agent to recover payment;
• asking the court to freeze assets;
• getting your money out of the debtor’s salary; or
• seeking insolvency proceedings. 

The option best for you will vary with the facts of the case and the financial situation of the debtor. If the debtor ends up in insolvency proceedings, you will want to check how you stand relative to other creditors in terms of receiving the proceeds of a sale of the debtor’s assets. 

If you need help with enforcing a payment for your business, our experienced disputes lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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